10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended August 28, 2011

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 0-20355

Costco Wholesale Corporation

(Exact name of registrant as specified in its charter)

Washington	91-1223280
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

999 Lake Drive, Issaquah, WA 98027

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (425) 313-8100

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, $.005 Par Value	The NASDAQ Global Select Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES x    NO ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES ¨    NO x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x    NO ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES x    NO ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x	Accelerated filer ¨
Non-accelerated filer ¨ (Do not check if a smaller company)	Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES ¨    NO x

The aggregate market value of the voting stock held by non-affiliates of the registrant at February 11, 2011 was $32,525,998,477

The number of shares outstanding of the registrant’s common stock as of September 30, 2011 was 433,365,150

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Company’s Proxy Statement for the Annual Meeting of Shareholders to be held on January 26, 2012, are incorporated by reference into Part III of this Form 10-K.

COSTCO WHOLESALE CORPORATION

ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED AUGUST 28, 2011

TABLE OF CONTENTS

		Page
PART I
Item 1.	Business		4
Item 1A.	Risk Factors		10
Item 1B.	Unresolved Staff Comments		17
Item 2.	Properties		18
Item 3.	Legal Proceedings		18
Item 4.	Reserved		18
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		19
Item 6.	Selected Financial Data		20
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		21
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		36
Item 8.	Financial Statements and Supplementary Data		37
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		37
Item 9A.	Controls and Procedures		38
Item 9B.	Other Information		38
PART III
Item 10.	Directors, Executive Officers and Corporate Governance		39
Item 11.	Executive Compensation		39
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		39
Item 13.	Certain Relationships and Related Transactions, and Director Independence		39
Item 14.	Principal Accounting Fees and Services		39
PART IV
Item 15.	Exhibits, Financial Statement Schedules		39

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INFORMATION RELATING TO FORWARD LOOKING STATEMENTS

Certain statements contained in this Report constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. They include statements that address activities, events, conditions or developments that we expect or anticipate may occur in the future and may relate to such matters as sales growth, increases in comparable store sales, cannibalization of existing locations by new openings, price or fee changes, earnings performance, earnings per share, stock-based compensation expense, warehouse openings and closures, the effect of adopting certain accounting standards, future financial reporting, financing, margins, return on invested capital, strategic direction, expense control, membership renewal rates, shopping frequency, litigation impact and the demand for our products and services. Forward-looking statements may also be identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions and are subject to risks and uncertainties that may cause actual results to differ materially from the forward-looking statements. Such forward-looking statements involve risks and uncertainties that may cause actual events, results, or performance to differ materially from those indicated by such statements, including, without limitation, the factors set forth in Item 1A—Risk Factors, and other factors noted in the Management’s Discussion and Analysis of Financial Condition and Results of Operations, and the consolidated financial statements and related notes in Item 8 of this Report. Forward-looking statements speak only as of the date they are made, and we do not undertake to update these forward-looking statements, except as required by law.

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PART I

Item 1—Business

Costco Wholesale Corporation and its subsidiaries (Costco or the Company) began operations in 1983 in Seattle, Washington. In October 1993, we merged with The Price Company, which had pioneered the membership warehouse concept, to form Price/Costco, Inc., a Delaware corporation. In January 1997, after the spin-off of most of our non-warehouse assets to Price Enterprises, Inc., we changed our name to Costco Companies, Inc. On August 30, 1999, we reincorporated from Delaware to Washington and changed our name to Costco Wholesale Corporation. Our common stock trades on the NASDAQ Global Select Market under the symbol “COST.”

We report on a 52/53-week fiscal year, consisting of thirteen four-week periods and ending on the Sunday nearest the end of August. The first three quarters consist of three periods each, and the fourth quarter consists of four periods (five weeks in the thirteenth period in a 53-week year). The material seasonal impact in our operations is an increased level of net sales and earnings during the winter holiday season. References to 2011, 2010, and 2009 relate to the 52-week fiscal years ended August 28, 2011, August 29, 2010, and August 30, 2009, respectively.

The Company and its subsidiaries are principally engaged in the operation of membership warehouses in the United States, Canada, the United Kingdom, Japan, Australia, through majority-owned subsidiaries in Taiwan and Korea, and a 50% owned joint venture in Mexico (Mexico). At the beginning of fiscal 2011, we began consolidating our Mexico joint venture due to the adoption of a new accounting standard. Mexico’s results previously were accounted for under the equity method and our 50% share was included in “interest income and other, net” in the consolidated statements of income. In the current year, the financial position and results of Mexico’s operations are fully consolidated and the joint venture partner’s 50% share is included in “net income attributable to noncontrolling interests” in the consolidated statements of income. The initial consolidation of Mexico increased total assets, liabilities, and revenue by approximately 3%, with no impact on net income or net income per common share attributable to Costco. See discussion in Note 1 to the consolidated financial statements included in Item 8 of this Report.

General

We operate membership warehouses based on the concept that offering our members low prices on a limited selection of nationally branded and private-label products in a wide range of merchandise categories will produce high sales volumes and rapid inventory turnover. This turnover, when combined with the operating efficiencies achieved by volume purchasing, efficient distribution and reduced handling of merchandise in no-frills, self-service warehouse facilities, enables us to operate profitably at significantly lower gross margins than traditional wholesalers, mass merchandisers, supermarkets, and supercenters.

We buy the majority of our merchandise directly from manufacturers and route it to a cross-docking consolidation point (depot) or directly to our warehouses. Our depots receive container-based shipments from manufacturers and reallocate these goods for shipment to our individual warehouses, generally in less than twenty-four hours. This maximizes freight volume and handling efficiencies, eliminating many of the costs associated with traditional multiple-step distribution channels. Such traditional steps include purchasing from distributors as opposed to manufacturers, use of central receiving, storing and distributing warehouses, and storage of merchandise in locations off the sales floor.

Because of our high sales volume and rapid inventory turnover, we generally sell inventory before we are required to pay many of our merchandise vendors, even though we take advantage of early payment discounts when available. To the extent that sales increase and inventory turnover becomes more rapid, a greater percentage of inventory is financed through payment terms provided by suppliers rather than by our working capital.

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Item 1—Business (Continued)

Our typical warehouse format averages approximately 143,000 square feet; newer units tend to be slightly larger. Floor plans are designed for economy and efficiency in the use of selling space, the handling of merchandise, and the control of inventory. Because shoppers are attracted principally by the quality of merchandise and the availability of low prices, our warehouses need not have elaborate facilities. By strictly controlling the entrances and exits of our warehouses and using a membership format, we have limited inventory losses (shrinkage) to less than two-tenths of one percent of net sales in the last several fiscal years—well below those of typical discount retail operations.

We generally limit marketing and promotional activities to new warehouse openings, occasional direct mail to prospective new members, and regular direct marketing programs (such as The Costco Connection, a magazine we publish for our members, coupon mailers, weekly email blasts from costco.com, and handouts) to existing members promoting selected merchandise. These practices result in lower marketing expenses as compared to typical retailers.

Our warehouses generally operate on a seven-day, 69-hour week, open weekdays between 10:00 a.m. and 8:30 p.m., with earlier weekend closing hours. Gasoline operations generally have extended hours. Because the hours of operation are shorter than those of traditional retailers, discount retailers and supermarkets, and due to other efficiencies inherent in a warehouse-type operation, labor costs are lower relative to the volume of sales. Merchandise is generally stored on racks above the sales floor and displayed on pallets containing large quantities, thereby reducing labor required for handling and stocking.

Our strategy is to provide our members with a broad range of high quality merchandise at prices consistently lower than they can obtain elsewhere. We seek to limit specific items in each product line to fast-selling models, sizes, and colors. Therefore, we carry an average of approximately 3,600 active stock keeping units (SKUs) per warehouse in our core warehouse business, as opposed to 45,000 to 140,000 SKUs or more at discount retailers, supermarkets, and supercenters. Many consumable products are offered for sale in case, carton, or multiple-pack quantities only.

In keeping with our policy of member satisfaction, we generally accept returns of merchandise. On certain electronic items, we generally have a 90-day return policy and provide, free of charge, technical support services, as well as an extended warranty.

Only the 2011 data in the accompanying tables includes Mexico.

The following table indicates the approximate percentage of net sales accounted for by major category of items:

	2011			2010			2009
Sundries (including candy, snack foods, tobacco, alcoholic and nonalcoholic beverages and cleaning and institutional supplies)		22	%		23	%		23	%
Hardlines (including major appliances, electronics, health and beauty aids, hardware, office supplies, cameras, garden and patio, sporting goods, toys, seasonal items and automotive supplies)		17	%		18	%		19	%
Food (including dry and institutionally packaged foods)		21	%		21	%		21	%
Softlines (including apparel, domestics, jewelry, housewares, media, home furnishings and small appliances)		10	%		10	%		10	%
Fresh Food (including meat, bakery, deli and produce)		12	%		12	%		12	%
Ancillary and Other (including gas stations, pharmacy, food court, optical, one-hour photo, hearing aid and travel)		18	%		16	%		15	%

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Item 1—Business (Continued)

Ancillary businesses within or next to our warehouses provide expanded products and services and encourage members to shop more frequently. The following table indicates the number of ancillary businesses in operation at fiscal year-end:

	2011		2010		2009
Food Court		586		534		521
One-Hour Photo Centers		581		530		518
Optical Dispensing Centers		574		523		509
Pharmacies		529		480		464
Gas Stations		368		343		323
Hearing-Aid Centers		427		357		303
Print Shops and Copy Centers		10		10		10
Car Washes		7		7		2
Number of warehouses		592		540		527

The 2010 and 2009 numbers exclude the 32 warehouses operated in Mexico.

Our electronic commerce businesses, costco.com in the U.S. and costco.ca in Canada, provide our members additional products generally not found in our warehouses, in addition to services such as digital photo processing, pharmacy, travel, and membership services.

Our warehouses accept cash, checks, certain debit cards, American Express and a private label Costco credit card. Losses associated with dishonored checks have been minimal, as members who have issued dishonored checks are identified and prevented from making further purchases until restitution is made.

We have direct buying relationships with many producers of national brand-name merchandise. We do not obtain a significant portion of merchandise from any one supplier. We have not experienced any difficulty in obtaining sufficient quantities of merchandise, and believe that if one or more of our current sources of supply became unavailable, we would be able to obtain alternative sources without substantial disruption of our business. We also purchase private label merchandise, as long as quality and customer demand are comparable and the value to our members is greater as compared to name brand items.

Certain financial information for our segments and geographic areas is included in Note 12 to the consolidated financial statements included in Item 8 of this Report.

Membership Policy

Our membership format is designed to reinforce customer loyalty and provide a continuing source of membership fee revenue. Members can utilize their memberships at any Costco warehouse location in any country. We have two primary types of members: Business and Gold Star (individual). Our member renewal rate was 89% in the U.S. and Canada, and approximately 86% on a worldwide basis, consistent with recent years. The renewal rate is a trailing calculation that captures renewals during the period seven to eighteen months prior to the reporting date. Businesses, including individuals with a business license, retail sales license or other evidence of business existence, may become Business members. Business members generally pay an annual membership fee of approximately $50 for the primary and household membership card, with add-on membership cards available for an annual fee of approximately $50 (including a free household card). Many of our business members also shop at Costco for their personal needs. Individual (Gold Star) memberships are available to individuals who do not qualify for a Business membership, for an annual fee of approximately $50, which includes a household card.

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Item 1—Business (Continued)

Our membership was made up of the following (in thousands):

	2011		2010		2009
Gold Star		25,000		22,500		21,500
Business		6,300		5,800		5,700
Business, Add-on Primary		4,000		3,300		3,400
Total primary cardholders		35,300		31,600		30,600
Additional cardholders		28,700		26,400		25,400
Total cardholders		64,000		58,000		56,000

The numbers for 2010 and 2009 exclude approximately 2,900 and 2,800 cardholders of Mexico at the end of those years.

Executive membership is available to all members, with the exception of Business Add-on members, in the U.S., Canada, Mexico, and the United Kingdom for an annual fee of approximately $100. This program, excluding Mexico, offers additional savings and benefits on various business and consumer services, such as merchant credit-card processing, auto and home insurance, the Costco auto purchase program, check printing services and a high yield savings program. The services are generally provided by third-parties and vary by country and state. In addition, Executive members qualify for a 2% annual reward (which can be redeemed at Costco warehouses), up to a maximum of approximately $500 per year, on qualified purchases made at Costco. At the end of 2011, 2010, and 2009, Executive members represented 38%, 36%, and 33%, respectively, of our primary membership. Executive members generally spend more than other members, and the percentage of our net sales attributable to these members continues to increase.

Labor

Our employee count approximated:

	2011		2010		2009
Full-time employees		92,000		82,000		79,000
Part-time employees		72,000		65,000		63,000
Total employees		164,000		147,000		142,000

The numbers for 2010 and 2009 exclude approximately 9,000 individuals who were employed by Mexico at the end of those years. Approximately 13,600 hourly employees in certain of our locations (all former Price Company locations) in five states are represented by the International Brotherhood of Teamsters. All remaining employees are non-union. We consider our employee relations to be very good.

Competition

Our industry is highly competitive, based on factors such as price, merchandise quality and selection, warehouse location and member service. We compete with over 800 warehouse club locations across the U.S. and Canada (Wal-Mart’s Sam’s Club and BJ’s Wholesale Club), and every major metropolitan area has multiple club operations. In addition, we compete with a wide range of global, national and regional wholesalers and retailers, including supermarkets, supercenter stores, department and specialty stores, gasoline stations, and internet-based retailers. Competitors such as Wal-Mart, Target, Kohl’s and Amazon.com are among our significant general merchandise retail competitors. We also compete with low-cost operators selling a single category or narrow range of merchandise, such as Lowe’s, Home Depot, Office Depot, PetSmart, Staples, Trader Joe’s, Whole Foods, Best Buy and Barnes & Noble. Our international operations face similar types of competitors.

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Item 1—Business (Continued)

Regulation

Certain state laws require that we apply minimum markups to our selling prices for specific goods, such as tobacco products, alcoholic beverages, and gasoline. While compliance with such laws may cause us to charge higher prices, other retailers are also typically governed by the same restrictions, and we believe that compliance with such laws currently in effect do not have a material adverse effect on our operations.

Certain jurisdictions have enacted or proposed laws and regulations that would prevent or restrict the operations or expansion plans of certain large retailers and warehouse clubs, including us, within their jurisdictions. If enacted, such laws and regulations could have a material adverse affect on our operations.

Intellectual Property

We believe that, to varying degrees, our trademarks, trade names, copyrights, proprietary processes, trade secrets, patents, trade dress and similar intellectual property add significant value to our business and are important factors in our success. Our failure to continue to develop, maintain, and protect these properties would adversely affect our business and financial results. We have invested significantly in the development and protection of our well-recognized brands, including the Costco Wholesale^® series of trademarks and our private label brand, Kirkland Signature^®. We believe that Kirkland Signature products are premium products offered to our members at prices that are generally lower than those for national brand products and that they help lower costs, differentiate our merchandise offerings from other retailers, and generally earn higher margins. We expect to increase the sales penetration of our private label items in the future. We rely on trademark and copyright law, trade secret protection, and confidentiality and license agreements with our employees and others to protect our proprietary rights. Effective intellectual property protection may not be available in every country in which we operate.

Available Information

Our internet website is www.costco.com. We make available through the Investor Relations section of that site, free of charge, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements and Forms 3, 4 and 5, and any amendments to those reports, as soon as reasonably practicable after filing such materials with, or furnishing such documents to, the Securities and Exchange Commission (SEC). The information found on our website is not part of this or any other report filed with or furnished to the SEC.

The Company has adopted a code of ethics for senior financial officers pursuant to section 406 of the Sarbanes-Oxley Act. Copies of the code are available free of charge by writing to Secretary, Costco Wholesale Corporation, 999 Lake Drive, Issaquah, WA 98027. If the Company makes any amendments to this code (other than technical, administrative, or non-substantive amendments) or grants any waivers, including implicit waivers, from this code to the CEO, chief financial officer or controller, we will disclose (on our website or in a Form 8-K report filed with the SEC) the nature of the amendment or waiver, its effective date, and to whom it applies.

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Item 1—Business (Continued)

Executive Officers of the Registrant

The following is a list of the names, ages, and positions of the executive officers of the Company. All executive officers have 25 or more years of service with the Company, with the exception of Mr. Murphy who has 24 years of service.

Name	Position With Company	Executive Officer Since		Age
James D. Sinegal	Chief Executive Officer. Mr. Sinegal is a co-founder of the Company and has been a director since its inception. In February 2010, Mr. Sinegal relinquished his role as President of the Company, which he had held since the Company’s inception.		1983		75
Jeffrey H. Brotman	Chairman of the Board. Mr. Brotman is a co-founder of the Company and has been a director since its inception.		1983		69
W. Craig Jelinek	President and Chief Operating Officer. Mr. Jelinek has been President and Chief Operating Officer of the Company since February 2010, when he also joined the Board of Directors. Prior to that date, he was Executive Vice President, Chief Operating Officer, Merchandising since 2004.		1995		59
Richard A. Galanti	Executive Vice President and Chief Financial Officer. Mr. Galanti has been a director of the Company since January 1995.		1993		55
John D. McKay	Executive Vice President, Chief Operating Officer, Northern and Midwest Division. Mr. McKay was Senior Vice President, General Manager, Northwest Region from 2000 to March 2010.		2010		54
Paul G. Moulton	Executive Vice President and Chief Information Officer. Mr. Moulton was Executive Vice President, Real Estate Development until March 2010.		2001		60
James P. Murphy	Executive Vice President, International Division. Mr. Murphy was Senior Vice President, International Division, from September 2004 to October 2010.		2011		58
Joseph P. Portera	Executive Vice President, Chief Operating Officer, Eastern and Canadian Divisions.		1994		59
Douglas W. Schutt	Executive Vice President, Chief Operating Officer, Merchandising. Mr. Schutt was Executive Vice President, Chief Operating Officer, Northern and Midwest Division from 2004 to March 2010.		2004		52
Thomas K. Walker	Executive Vice President, Construction, Distribution and Traffic.		2004		71
Dennis R. Zook	Executive Vice President, Chief Operating Officer, Southwest and Mexico Divisions.		1993		62

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Item 1A—Risk Factors

The risks described below could materially and adversely affect our business, financial condition, and results of operations. These risks are not the only risks that we face. Our business operations could also be affected by additional factors that apply to all companies operating in the United States and globally, as well as other risks that are not presently known to us or that we currently consider to be immaterial.

We face strong competition from other retailers and warehouse club operators, which could negatively affect our financial performance.

The retail business is highly competitive. We compete for members, employees, sites, products and services and in other important respects with many other local, regional and national retailers, both in the United States and in foreign countries. We compete with a wide range of global, national and regional wholesalers and retailers, including supermarkets, supercenter stores, department and specialty stores, gasoline stations, and internet-based retailers. Such retailers and warehouse club operators compete in a variety of ways, including merchandise pricing, selection and availability, services, location, convenience, and store hours. Our inability to respond effectively to competitive pressures and changes in the retail markets could negatively affect our financial performance. Some competitors may have greater financial resources, better access to merchandise, and greater market penetration than we do.

General economic factors, domestically and internationally, may adversely affect our financial performance.

Higher interest rates, energy costs, inflation, levels of unemployment, healthcare costs, consumer debt levels, unsettled financial markets, weaknesses in housing and real estate markets, reduced consumer confidence, changes related to government fiscal and tax policies and other economic factors could adversely affect demand for our products and services or require a change in the mix of products we sell. Prices of certain commodity products, including gasoline and other food products, are historically volatile and are subject to fluctuations arising from changes in domestic and international supply and demand, labor costs, competition, market speculation, government regulations and periodic delays in delivery. Rapid and significant changes in commodity prices may affect our sales and profit margins. These factors can also increase our merchandise costs and/or selling, general and administrative expenses, and otherwise adversely affect our operations and financial results. General economic conditions can also be affected by the outbreak of war, acts of terrorism, or other significant national or international events.

Our growth strategy includes expanding our business, both in existing markets and in new markets.

Our future growth is dependent, in part, on our ability to acquire property, and build or lease new warehouses. We compete with other retailers and businesses for suitable locations. Local land use and other regulations restricting the construction and operation of our warehouses, as well as local community actions opposed to the location of our warehouses at specific sites and the adoption of local laws restricting our operations and environmental regulations may impact our ability to find suitable locations, and increase the cost of constructing, leasing and operating our warehouses. We also may have difficulty negotiating leases or real estate purchase agreements on acceptable terms. Failure to manage these and other similar factors effectively will affect our ability to timely build or lease new warehouses, which may have a material adverse affect on our future growth and profitability.

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Item 1A—Risk Factors (Continued)

We seek to expand our business in existing markets in order to attain a greater overall market share. Because our warehouses typically draw members from their local areas, a new warehouse may draw members away from our existing warehouses and adversely affect comparable warehouse sales performance and member traffic at those existing warehouses.

We also intend to open warehouses in new markets. The risks associated with entering a new market include difficulties in attracting members due to a lack of familiarity with us, attracting members of other wholesale club operators currently operating in the new market, our lack of familiarity with local member preferences, and seasonal differences in the market. In addition, entry into new markets may bring us into competition with new competitors or with existing competitors with a large, established market presence. In new markets, we cannot ensure that our new warehouses will be profitably deployed; as a result, our future profitability may be delayed or otherwise materially adversely affected.

We are highly dependent on the financial performance of our United States and Canada operations.

Our financial and operational performance is highly dependent on our United States and Canada operations, which comprised 89% and 83% of consolidated net sales and operating income in 2011, respectively. Within the United States, we are highly dependent on our California operations, which comprised 24% of consolidated net sales in 2011. Our California market, in general, has a larger percentage of higher volume warehouses as compared to our other markets. Any substantial slowing or sustained decline in these operations could materially adversely affect our business and financial results. Declines in financial performance of our United States operations, particularly in California, and our Canada operations could arise from, among other things: failing to meet targets for warehouse openings; declines in actual or estimated comparable warehouse sales growth rates and expectations; negative trends in operating expenses, including increased labor, healthcare and energy costs; cannibalizing existing locations with new warehouses; shifts in sales mix toward lower gross margin products; changes or uncertainties in economic conditions in our markets, including higher levels of unemployment and depressed home values; and failing to consistently provide high quality products and innovative new products to retain our existing member base and attract new members.

We depend on vendors to supply us with quality merchandise at the right prices in a timely manner.

We depend heavily on our ability to purchase merchandise in sufficient quantities at competitive prices. We have no assurances of continued supply, pricing or access to new products, and any vendor could at any time change the terms upon which it sells to us or discontinue selling to us. Member demands may lead to out-of-stock positions of our merchandise, leading to loss of sales and profits.

We purchase our merchandise from numerous domestic and foreign manufacturers and importers and have thousands of vendor relationships. Our inability to acquire suitable merchandise on acceptable terms or the loss of key vendors could negatively affect us. We may not be able to develop relationships with new vendors, and products from alternative sources, if any, may be of a lesser quality or more expensive than those from existing vendors. Because of our efforts to adhere to high quality standards for which available supply may be limited, particularly for certain food items, the large volume we demand may not be consistently available.

Our suppliers are subject to risks, including labor disputes, union organizing activities, financial liquidity, inclement weather, natural disasters, supply constraints, and general economic and political conditions, that could limit their ability to timely provide us with acceptable merchandise. For these or other reasons, one or more of our suppliers might not adhere to our quality control, legal or regulatory stan

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Item 1A—Risk Factors (Continued)

dards. These deficiencies may delay or preclude delivery of merchandise to us and might not be identified before we sell such merchandise to our members. This failure could lead to litigation and recalls, which could damage our reputation and our brands, increase our costs, and otherwise hurt our business.

Disruptions in our depot operations could adversely affect sales and member satisfaction.

We depend on the orderly operation of the receiving and distribution process, primarily through our depots. Although we believe that our receiving and distribution process is efficient, unforeseen disruptions in operations due to fires, hurricanes, earthquakes or other catastrophic events, labor shortages and disagreements or shipping problems, may result in delays in the delivery of merchandise to our warehouses, which could adversely affect sales and the satisfaction of our members.

We may not timely identify or effectively respond to consumer trends, which could negatively affect our relationship with our members, the demand for our products and services, and our market share.

It is difficult to consistently and successfully predict the products and services our members will demand. Our success depends, in part, on our ability to identify and respond to trends in demographics and consumer preferences. Failure to timely identify or effectively respond to changing consumer tastes, preferences (including those relating to sustainability of product sources) and spending patterns could negatively affect our relationship with our members, the demand for our products and services and our market share. If we are not successful at predicting our sales trends and adjusting our purchases accordingly, we may have excess inventory, which could result in additional markdowns and reduce our operating performance. This could have an adverse effect on margins and operating income.

Our failure to maintain positive membership loyalty and brand recognition could adversely affect our financial results.

Membership loyalty is essential to our business model. Damage to our brands or reputation may negatively impact comparable warehouse sales, lower employee morale and productivity, diminish member trust, and reduce member renewal rates and, accordingly, membership fee revenues, resulting in a reduction in shareholder value.

In addition, we sell many products under our owned and exclusive Kirkland Signature brand. Maintaining consistent product quality, competitive pricing, and availability of our Kirkland Signature products for our customers is essential to developing and maintaining customer loyalty. These products also generally carry higher margins than national brand products and represent a growing portion of our overall sales. If the Kirkland Signature brand experiences a loss of consumer acceptance or confidence, our sales and gross margin results could be adversely affected.

Changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters could significantly affect our financial results.

Generally accepted accounting principles and related accounting pronouncements, implementation guidelines and interpretations with regard to a wide range of matters that are relevant to our business, including, but not limited to, revenue recognition, sales returns reserves, impairment of long-lived assets and warehouse closing costs, inventories, vendor rebates and other consideration, self-insurance liabilities, income taxes, unclaimed property laws and litigation, and other contingent liabilities are highly complex and involve many subjective assumptions, estimates and judgments by our management. Changes

12

Item 1A—Risk Factors (Continued)

in these rules or their interpretation or changes in underlying assumptions, estimates or judgments by our management could significantly change our reported or expected financial performance. Provisions for losses related to self-insured risks are generally based upon independent actuarially determined estimates. The assumptions underlying the ultimate costs of existing claim losses can be highly unpredictable, which can affect the liability recorded for such claims. For example, variability in inflation rates of health care costs inherent in these claims can affect the amounts realized. In March 2010, the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 were enacted. This legislation expands health care coverage to many uninsured individuals and expands coverage to those already insured. We expect our healthcare costs to increase, but not materially, as a result of this legislation. Similarly, changes in legal trends and interpretations, as well as a change in the nature and method of how claims are settled can impact ultimate costs. Although our estimates of liabilities incurred do not anticipate significant changes in historical trends for these variables, any changes could have a considerable effect upon future claim costs and currently recorded liabilities and could materially impact our consolidated financial statements.

Unfavorable changes in tax rates could adversely affect our operations, financial conditions or cash flows.

We compute our income tax provision based on enacted tax rates in the countries in which we operate. As the tax rates vary among countries, a change in earnings attributable to the various jurisdictions in which we operate could result in an unfavorable change in our overall tax provision. Additionally, any change in the enacted tax rates, any adverse outcome in connection with any income tax audits in any jurisdiction, including transfer pricing disputes, or any change in the pronouncements relating to accounting for income taxes may have a material adverse affect on our financial condition, results of operations, or cash flows.

Failure of our internal control over financial reporting could make our financial results inaccurate or untimely.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting for external purposes in accordance with U.S. generally accepted accounting principles. Internal control over financial reporting includes: maintaining records that in reasonable detail accurately and fairly reflect our transactions; providing reasonable assurance that transactions are recorded as necessary for preparation of the financial statements; providing reasonable assurance that our receipts and expenditures of our assets are made in accordance with management authorization; and providing reasonable assurance that unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements would be prevented or detected on a timely basis. Because of its inherent limitations, internal control over financial reporting is not intended to and cannot provide absolute assurance that a misstatement of our financial statements would be prevented or detected. Any failure to maintain an effective system of internal control over financial reporting could limit our ability to report our financial results accurately and timely or to detect and prevent fraud.

We rely extensively on computer systems to process transactions, summarize results and manage our business. Disruptions in both our primary and back-up systems could harm our business.

Although we believe that we have independent, redundant, and primary and secondary computer systems, given the number of individual transactions we have each year it is important that we maintain

13

Item 1A—Risk Factors (Continued)

uninterrupted operation of our business-critical computer systems. Our computer systems, including our back-up systems, are subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, internal or external security breaches, catastrophic events such as fires, earthquakes, tornadoes and hurricanes, and errors by our employees. If our computer systems and our back-up systems are damaged or cease to function properly, we may have to make significant investments to fix or replace them, and we may suffer interruptions in our operations in the interim. Any material interruption in our computer systems may have a material adverse effect on our business or results of operations.

We expect to make significant technology investments in the coming years, which are key to managing our business. We must monitor and choose the right investments and implement them at the right pace. Excessive technological change could impact the effectiveness of adoption, and could make it more difficult for us to realize benefits from the technology. Targeting the wrong opportunities, failing to make the best investments or making an investment commitment significantly above or below our needs may result in the loss of our competitive position or underlying financial data. Additionally, the costs, potential problems, and interruptions associated with implementing technology initiatives could disrupt or reduce the efficiency of our operations in the short term. These initiatives might not provide the anticipated benefits or provide them in a delayed or more costly manner.

Our international operations subject us to risks associated with the legislative, judicial, accounting, regulatory, political and economic factors specific to the countries or regions in which we operate, which could adversely affect our financial performance.

During 2011, our international operations, including Canada, generated 27% of our consolidated net sales. We plan to continue expanding our international operations. As a result of these expansion activities in countries outside the United States, we expect that our international operations could account for a larger portion of our net sales in future years. Future operating results internationally could be negatively affected by a variety of factors, many beyond our control and similar to those we face in the United States. These factors include political conditions, economic conditions, regulatory constraints, currency regulations and exchange rates, and other matters in any of the countries or regions in which we operate, now or in the future. Other factors that may impact international operations include foreign trade, monetary and fiscal policies both of the United States and of other countries, laws and regulations of foreign governments and the United States (such as the Foreign Corrupt Practices Act), agencies and similar organizations, and risks associated with having major facilities located in countries which have been historically less stable than the United States. Risks inherent in international operations also include, among others, the costs and difficulties of managing international operations, adverse tax consequences and greater difficulty in enforcing intellectual property rights. Additionally, foreign currency exchange rates and fluctuations may have an adverse impact on our future costs or on future cash flows from our international operations.

Market expectations for our financial performance is high.

We believe that the price of our stock generally reflects high market expectations for our future operating results. Any failure to meet or delay in meeting these expectations, including our comparable warehouse sales growth rates, margins, earnings and earnings per share or new warehouse openings, could cause the market price of our stock to decline, as could changes in our dividend or stock repurchase policies.

14

Item 1A—Risk Factors (Continued)

Natural disasters or other catastrophic events could unfavorably affect our financial performance.

Natural disasters, such as hurricanes or earthquakes, particularly in California or in Washington state, where our centralized operating systems and administrative personnel are located, could unfavorably affect our operations and financial performance. Such events could result in physical damage to one or more of our properties, the temporary closure of one or more warehouses or depots, the temporary lack of an adequate work force in a market, the temporary or long-term disruption in the supply of products from some local and overseas suppliers, the temporary disruption in the transport of goods from overseas, delays in the delivery of goods to our depots or warehouses within a country in which we operate and the temporary reduction in the availability of products in our warehouses. Public health issues, such as a potential H1N1 flu (swine flu) pandemic, whether occurring in the United States or abroad, could disrupt our operations, disrupt the operations of suppliers or customers, or have an adverse impact on consumer spending and confidence levels. We may be required to suspend operations in some or all of our locations, which could have a material adverse effect on our business, financial condition, and results of operations. These events could also reduce demand for our products or make it difficult or impossible to receive products from suppliers.

Factors associated with climate change could adversely affect our business.

We use natural gas, diesel fuel, gasoline, and electricity in our distribution and warehouse operations. Increased government regulations to limit carbon dioxide and other greenhouse gas emissions may result in increased compliance costs and legislation or regulation affecting energy inputs could materially affect our profitability. In addition, climate change could affect our ability to procure needed commodities at costs and in quantities we currently experience. We also sell a substantial amount of gasoline, the demand for which could be impacted by concerns about climate change and which also could face increased regulation. Climate change may be associated with extreme weather conditions, such as more intense hurricanes, thunderstorms, tornados and snow or ice storms, as well as rising sea levels. Extreme weather conditions increase our costs, and damage resulting from extreme weather may not be fully insured.

We are subject to a wide variety of federal, state, regional, local and international laws and regulations relating to the use, storage, discharge, and disposal of hazardous materials and hazardous and non-hazardous wastes, and other environmental matters.

Any failure to comply with these laws could result in costs to satisfy environmental compliance, remediation or compensatory requirements, or the imposition of severe penalties or restrictions on operations by governmental agencies or courts that could adversely affect our operations.

We are involved in a number of legal proceedings and audits, and while we cannot predict the outcomes of such proceedings and other contingencies with certainty, some of these outcomes may unfavorably affect our operations or increase our costs.

We are or may become involved in a number of legal proceedings and audits, including grand jury investigations, other government investigations, consumer, employment, tort and other litigation (see discussion of Legal Proceedings in Note 11 to the consolidated financial statements included in Item 8 of this Report). We cannot predict with certainty the outcomes of these legal proceedings and other contingencies, including environmental remediation and other proceedings commenced by governmental authorities. The outcome of some of these legal proceedings and other contingencies could require us to take or refrain from taking actions which could unfavorably affect our operations or could require us to pay substantial amounts of money. Additionally, defending against these lawsuits and

15

Item 1A—Risk Factors (Continued)

proceedings may involve significant expense and diversion of management’s attention and resources. Our business requires compliance with a great variety of laws and regulations. Failure to achieve compliance could subject us to lawsuits and other proceedings, and lead to damage awards, fines and penalties.

We are subject to the risks of selling unsafe products.

If our merchandise offerings, including food and prepared food products for human consumption, drugs and childrens’ products, do not meet or are perceived not to meet applicable safely standards or our members’ expectations regarding safety, we could experience lost sales, increased costs and be exposed to legal and reputational risk. The sale of these items involves the risk of injury to our members. Such injuries may result from tampering by unauthorized third parties, product contamination or spoilage, including the presence of foreign objects, substances, chemicals, other agents, or residues introduced during the growing, manufacturing, storage, handling and transportation phases. Our vendors are generally contractually required to comply with applicable product safety laws, and we are dependent on them to ensure that the products we buy comply with all safety standards. While we are subject to governmental inspection and regulations and work to comply in all material respects with applicable laws and regulations, we cannot be sure that consumption of our products will not cause a health-related illness in the future or that we will not be subject to claims, lawsuits, or government investigations relating to such matters, resulting in costly product recalls and other liabilities. Even if a product liability claim is unsuccessful or is not fully pursued, the negative publicity surrounding any assertion that our products caused illness or injury could adversely affect our reputation with existing and potential members and our corporate and brand image and these effects could be long term.

Our success depends on the continued contributions of management and on our ability to attract, train and retain highly qualified employees.

Our success depends to a significant degree on the continued contributions of members of our senior management and other key operations, merchandising and administrative personnel, and the loss of any such person(s) could have a material adverse effect on our business. Other than an annual agreement with our CEO, Mr. Sinegal, we have no employment agreements with our officers. We must attract, train and retain a large and growing number of highly qualified employees, while controlling related labor costs and maintaining our core values. Our ability to control labor costs is subject to numerous external factors, including prevailing wage rates and healthcare and other insurance costs. We compete with other retail and non-retail businesses for these employees and invest significant resources in training and motivating them. There is no assurance that we will be able to attract or retain highly qualified employees in the future, which could have a material adverse effect on the Company’s business, results of operations and financial condition. The Company does not maintain key man insurance.

If we do not maintain the privacy and security of member-related and business information, we could damage our reputation with members, incur substantial additional costs and become subject to litigation.

We receive, retain, and transmit certain personal information about our members. In addition, our online operations at www.costco.com and www.costco.ca depend upon the secure transmission of confidential information over public networks, including information permitting cashless payments. A compromise of our security systems or those of other business partners that results in our members’ personal information being obtained by unauthorized persons could adversely affect our reputation with our members and others, as well as our operations, results of operations, financial condition and liquid-

16

Item 1A—Risk Factors (Continued)

ity, and could result in litigation against us or the imposition of penalties. In addition, a security breach could require that we expend significant additional resources related to the security of information systems and could result in a disruption of our operations, particularly our online sales operations.

Additionally, the use of individually identifiable data by our business and our business associates is regulated at the international, federal and state levels. Privacy and information security laws and regulations change, and compliance with them may result in cost increases due to necessary systems changes and the development of new administrative processes. If we or those with whom we share information fail to comply with these laws and regulations or experience a data security breach, our reputation could be damaged, possibly resulting in lost future business, and we could be subjected to additional legal risk as a result of non-compliance.

Our security measures may be undermined due to the actions of outside parties, employee error, malfeasance, or otherwise, and, as a result, an unauthorized party may obtain access to our data systems and misappropriate business and personal information. Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and may not immediately produce signs of intrusion, we may be unable to anticipate these techniques or to implement adequate preventative measures. Any such breach or unauthorized access could result in significant legal and financial exposure, damage to our reputation, and potentially have an adverse effect on our business.

Item 1B—Unresolved Staff Comments

None.

17

Item 2—Properties

Warehouse Properties

At August 28, 2011, we operated 592 membership warehouses:

NUMBER OF WAREHOUSES

	Own Land and Building		Lease  Land and/or Building(1)		Total
United States and Puerto Rico		339		90		429
Canada		72		10		82
Mexico		31		1		32
United Kingdom		19		3		22
Japan		1		8		9
Taiwan		0		8		8
Korea		3		4		7
Australia		2		1		3
Total		467		125		592

⁽¹⁾  85 of the 125 leases are land-leases only, where Costco owns the building.

The following schedule shows warehouse openings (net of closings) by region for the past five fiscal years and expected warehouse openings (net of closings) through December 31, 2011:

Openings by Fiscal Year	United States		Canada		Other International			Total		Total Warehouses in Operation
2007 and prior		383		71		34			488		488
2008		15		4		5			24		512
2009		8		2		5			15		527
2010		10		2		1			13		540
2011		13		3		36	(2)		52		592
2012 (expected through 12/31/11)		4		—		2			6		598
Total		433		82		83			598

⁽²⁾  This number includes the 32 Mexico warehouses in operation at the beginning of 2011, when we began consolidating Mexico. Mexico opened 30 warehouses in 2007 and prior, one in 2008 and one in 2009.

At the end of 2011, our warehouses contained approximately 84.4 million square feet of operating floor space: 62.1 million in the United States, 11.2 million in Canada and 11.1 million in other international locations, including Mexico.

Our executive offices are located in Issaquah, Washington and occupy approximately 581,000 square feet. We operated eight regional offices in the United States, two regional offices in Canada and six regional offices internationally at the end of 2011, containing approximately 422,000 square feet. Additionally, we operated regional cross-docking facilities (depots) for the consolidation and distribution of most shipments to the warehouses, and various processing, packaging, and other facilities to support ancillary and other businesses. At the end of 2011, we operated 12 depots in the United States, four in Canada and four internationally, consisting of approximately 8.3 million square feet.

Item 3—Legal Proceedings

See discussion of Legal Proceedings in Note 11 to the consolidated financial statements included in Item 8 of this Report.

Item 4—Reserved

18

PART II

Item 5—Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information and Dividend Policy

Our common stock is traded on the National Market tier of NASDAQ under the symbol “COST.” On September 30, 2011, we had 8,198 stockholders of record.

The following table shows the quarterly high and low closing sale prices as reported by NASDAQ for each quarter during the last two fiscal years and the quarterly cash dividend declared per share of our common stock during the periods indicated.

	Price Range				Cash Dividends Declared
	High		Low
2011:
Fourth Quarter	$	83.86	$	70.39	$	0.240
Third Quarter		81.46		69.76		0.240
Second Quarter		75.04		66.90		0.205
First Quarter		67.02		56.07		0.205
2010:
Fourth Quarter		59.16		53.61		0.205
Third Quarter		61.74		57.31		0.205
Second Quarter		60.89		57.07		0.180
First Quarter		61.12		50.65		0.180

Payment of future dividends is subject to declaration by the Board of Directors. Factors considered in determining the size of the dividends are our profitability and expected capital needs. Subject to these qualifications, we presently expect to continue to pay dividends on a quarterly basis.

Issuer Purchases of Equity Securities (dollars in millions, except per share data)

The following table sets forth information on our common stock repurchase program activity for the 16-week fourth quarter of fiscal 2011:

Period(1)	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs(2)		Maximum Dollar Value of Shares that May Yet be Purchased Under the Programs(2)
May 9, 2011—June 5, 2011		70,000	$	79.16		70,000	$	3,994
June 6, 2011—July 3, 2011		1,052,000		79.56		1,052,000	$	3,911
July 4, 2011—July 31, 2011		917,000		80.64		917,000	$	3,837
August 1, 2011—August 28, 2011		1,756,000		74.85		1,756,000	$	3,706
Total fourth quarter		3,795,000	$	77.63		3,795,000

⁽¹⁾  Monthly information is presented by reference to our fiscal periods during the fourth quarter of fiscal 2011.

⁽²⁾  Our stock repurchase program is conducted under a $4,000 authorization of our Board of Directors approved in April 2011, which expires in April 2015.

Equity Compensation Plans

Information related to our equity compensation plans is incorporated herein by reference to the Proxy Statement. The Proxy Statement will be filed with the SEC within 120 days of the end of our fiscal year.

19

Item 6—Selected Financial Data

The following table sets forth certain information concerning our consolidated financial condition, operating results, and key operating metrics. This information should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in Item 7 and our consolidated financial statements included in Item 8 of this Report.

At the beginning of fiscal 2011, we began consolidating our 50% owned Mexico joint venture (Mexico) on a prospective basis due to the adoption of a new accounting standard. Mexico’s results for the prior years were accounted for under the equity method and our 50% share was included in “interest income and other” in the consolidated statements of income in Item 8. In the current year, the financial position and results of Mexico’s operations are fully consolidated and the joint venture partner’s 50% share is included in “net income attributable to noncontrolling interests” in the consolidated statements of income in Item 8 of this Report. The initial consolidation of Mexico increased total assets, liabilities, and revenue by approximately 3%, with no impact on net income or net income per common share attributable to Costco. See discussion in Note 1 to the consolidated financial statements included in Item 8 of this Report.

SELECTED FINANCIAL DATA

(dollars in millions, except per share and warehouse number data)

As of and for the year ended	Aug. 28, 2011 (52 weeks)			Aug. 29, 2010 (52 weeks)			Aug. 30, 2009 (52 weeks)			Aug. 31, 2008 (52 weeks)			Sept. 2, 2007 (52 weeks)
RESULTS OF OPERATIONS
Net sales	$	87,048		$	76,255		$	69,889		$	70,977		$	63,088
Merchandise costs		77,739			67,995			62,335			63,503			56,450
Gross margin		9,309			8,260			7,554			7,474			6,638
Membership fees		1,867			1,691			1,533			1,506			1,313
Operating income		2,439			2,077			1,777			1,969			1,609
Net income attributable to Costco		1,462			1,303			1,086			1,283			1,083
Net income per diluted common share attributable to Costco		3.30			2.92			2.47			2.89			2.37
Dividends per share	$	0.89		$	0.77		$	0.68		$	0.61		$	0.55
Increase (decrease) in comparable warehouse sales(1)
United States		7	%		4	%		(2	%)		6	%		5	%
International		16	%		19	%		(8	%)		15	%		9	%
Total		10	%		7	%		(4	%)		8	%		6	%
Increase in international comparable warehouse sales in local currency		10	%		8	%		7	%		6	%		5	%
BALANCE SHEET DATA
Net property and equipment	$	12,432		$	11,314		$	10,900		$	10,355		$	9,520
Total assets		26,761			23,815			21,979			20,682			19,607
Short-term borrowings		—			26			16			134			54
Current portion of long-term debt		900			—			80			6			60
Long-term debt, excluding current portion		1,253			2,141			2,130			2,206			2,108
Costco stockholders’ equity	$	12,002		$	10,829		$	10,024		$	9,194		$	8,626
WAREHOUSE INFORMATION
Warehouses in Operation(2)
Beginning of year(2)		572			527			512			488			458
Opened(3)		24			14			19			34			30
Closed(3)		(4	)		(1	)		(4	)		(10	)		—
End of year		592			540			527			512			488

⁽¹⁾  Includes net sales at warehouses open greater than one year, including relocated facilities.

⁽²⁾  Excludes, in 2010 and in prior years presented, warehouses operated in Mexico through a 50% owned joint venture. Mexico opened 30 of these warehouses in 2007 and prior, one in 2008, and one in 2009. The 2011 beginning-of-year figure includes the 32 Mexico warehouses consolidated at the beginning of the fiscal year.

⁽³⁾  Includes warehouse relocations and the closure in July 2009 of two Costco Home locations.

20

Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations (dollars in millions, except per share and warehouse number data)

OVERVIEW

We believe that the most important driver of increasing our profitability is sales growth, particularly comparable sales growth (sales in warehouses open for at least one year). Comparable sales growth is achieved through increasing the frequency with which our members shop and the amounts they spend on each visit. Sales comparisons can also be particularly influenced by two factors that are beyond our control, including fluctuations in currency exchange rates (with respect to the consolidation of the results of our international operations) and changes in the cost of gasoline and associated competitive conditions (primarily impacting domestic operations). The higher our comparable sales the more we can leverage certain of our selling, general and administrative expenses, reducing them as a percentage of sales and enhancing profitability. Generating comparable sales growth is foremost a question of making available to our members the right merchandise at the right prices, a skill that we believe we have repeatedly demonstrated over the long term. Another substantial factor in sales growth is the health of the economies in which we do business, especially the United States. Sales growth and our gross margin are also impacted by our competition, which is vigorous and widespread, including a wide range of global, national and regional wholesalers and retailers, including supermarkets, supercenter stores, department and specialty stores, gasoline stations, and internet-based retailers. While we cannot control or reliably predict general economic health or changes in competition, we believe that we have been successful historically in adapting our business to these changes, such as through adjustments to our pricing and to our merchandise mix, including increasing the penetration of our private label items. Our philosophy is not to focus in the short term on maximizing prices that our members can be charged but to maintain what we believe is a perception among our members of our “pricing authority”—consistently providing the most competitive values. This may cause us, for example, to absorb increases in merchandise costs at certain times rather than immediately passing them along to our members, negatively impacting gross margin.

We also achieve sales growth by opening new warehouses and relocating existing warehouses to larger and better-located facilities. As our warehouse base grows, available and desirable potential sites become more difficult to secure, and square footage growth becomes a comparatively less substantial component of growth. However, the negative aspects of such growth, including lower initial operating profitability relative to existing warehouses and cannibalization of sales at existing warehouses when openings occur in existing markets, are ameliorated. Our rate of square footage growth is higher in foreign markets, due to the smaller base in those markets, and we expect that to continue.

Our financial performance also depends heavily on our ability to control costs. While we believe that we have achieved successes in this area historically, some significant costs are partially outside our control, most particularly health care and utility expenses. With respect to expenses relating to the compensation of our employees, our philosophy is not to seek to minimize the wages and benefits that they earn. Rather, we believe that achieving our longer-term objectives of reducing employee turnover and enhancing employee satisfaction requires maintaining compensation levels that are better than the industry average for much of our workforce. This may cause us, for example, to absorb costs that other employers might seek to pass through to their workforces. Because our business is operated on low margins, modest changes in various items in the income statement, particularly gross margin and selling, general and administrative expenses, can have substantial impacts on net income.

Key items for 2011 included:

• Net sales increased 14.2% to $87,048, driven by a 10% increase in comparable sales and sales at the 20 net new warehouses opened in fiscal 2011. Net sales were favorably impacted by increases in the price of gasoline and by foreign currencies strengthening against the U.S. dollar;

21

Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations (dollars in millions, except per share and warehouse number data) (Continued)

• Membership fees increased 10.4% to $1,867, primarily due to the increased penetration of the higher-fee Executive Membership program and new membership sign-ups;

• Gross margin (net sales less merchandise costs) as a percentage of net sales decreased 14 basis points and included a pre-tax last in, first out (LIFO) inventory charge of $87. There was no LIFO charge in 2010;

• Selling, general and administrative (SG&A) expenses as a percentage of net sales decreased 31 basis points;

• Net income attributable to Costco increased 12.2% to $1,462, or $3.30 per diluted share compared to $1,303, or $2.92 per diluted share in 2010. The previously mentioned LIFO charge negatively impacted diluted earnings per share by $0.12;

• The Board of Directors approved an increase in the quarterly cash dividend from $0.205 to $0.24 per share;

• We repurchased 8,939,000 shares of our common stock, at an average cost of $71.74 per share, totaling approximately $641;

• The Board of Directors authorized the repurchase of an additional $4,000 of our common stock under a repurchase program expiring in April 2015; and

• In August 2011, we announced the retirement of Jim Sinegal as our Chief Executive Officer, effective January 1, 2012. The Board of Directors elected Craig Jelinek, currently President and Chief Operating Officer, as President and Chief Executive Officer effective January 1, 2012. Mr. Sinegal will remain with Costco in an advisory role until February 2013. In addition, he will continue to serve on the Board of Directors.

Certain percentages presented are calculated using actual results prior to rounding. Unless otherwise noted, references to net income relate to net income attributable to Costco.

Only the 2011 data in the accompanying tables includes Mexico.

Results of Operations

Net Sales

	2011			2010			2009
Net sales	$	87,048		$	76,255		$	69,889
Net sales increase (decrease)		14.2	%		9.1	%		(1.5	%)
Increase (decrease) in comparable sales		10	%		7	%		(4	%)
Warehouse openings, net		20			13			15

2011 vs. 2010

Net Sales

Net sales increased $10,793 or 14.2% during 2011 compared to 2010. Excluding sales of Mexico, the increase would have been 11%. This increase was primarily attributable to an increase in comparable warehouse sales, and the remainder primarily from sales at the 20 net new warehouses opened during 2011 (24 opened, and four closed, two due to relocation and two temporarily closed for repairs due to damage caused by the March 11, 2011 Japan earthquake, one of which remained closed as of the end of 2011).

22

Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations (dollars in millions, except per share and warehouse number data) (Continued)

Foreign currencies strengthened against the U.S. dollar, which positively impacted net sales during 2011 by approximately $1,308, or 172 basis points. Net sales were also positively impacted by gasoline price increases during 2011 by approximately $1,699, or 223 basis points, which resulted from a 24% increase in the average sales price per gallon.

Our sales results continued to be impacted, albeit to a lesser extent than in 2010, by general economic conditions, and those conditions may continue to have an adverse impact on spending by our members. We believe, however, that due to the nature of our business model, we are better positioned than many retailers to compete in such an environment.

Comparable Sales

Comparable sales, including Mexico for both this year and last year, increased 10% during 2011, and were positively impacted by increases in the average amount spent by our members and in their shopping frequency. The strengthening of foreign currencies favorably impacted comparable sales by approximately $1,260, or 162 basis points during 2011. Gasoline price inflation positively impacted comparable sales results by approximately $1,679, or 220 basis points during 2011. Reported comparable sales growth includes the negative impact of cannibalization (established warehouses losing sales to our newly opened locations).

2010 vs. 2009

Net Sales

Net sales increased $6,366 or 9.1% during 2010 compared to 2009. The increase was primarily attributable to an increase in comparable warehouse sales and the remainder primarily from sales at the 13 net new warehouses opened during 2010 (14 opened and one closed due to a relocation).

Foreign currencies strengthened against the U.S. dollar, which positively impacted net sales during 2010 by approximately $1,570 or 225 basis points. Net sales were also positively impacted by gasoline price inflation during 2010 by approximately $895, or 128 basis points, which resulted from a 17% increase in the average sales price per gallon.

Comparable Sales

Comparable sales increased 7% in 2010 and were positively impacted primarily by an increase in shopping frequency. Strengthening foreign currencies positively impacted comparable sales by approximately $1,510, or 217 basis points, in 2010. Gasoline price inflation positively impacted comparable sales results by approximately $882, or 126 basis points, during 2010. Reported comparable sales growth includes the negative impact of cannibalization (established warehouses losing sales to our newly opened locations).

Membership Fees

	2011			2010			2009
Membership fees	$	1,867		$	1,691		$	1,533
Membership fees increase		10.4	%		10.3	%		1.8	%
Membership fees as a percent of net sales		2.15	%		2.22	%		2.19	%
Total cardholders (000’s)		64,000			58,000			56,000

23

Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations (dollars in millions, except per share and warehouse number data) (Continued)

2011 vs. 2010

Membership fees increased 10.4% in 2011. Excluding membership fees from Mexico, the increase would have been 8.3% in 2011. This increase was due to the higher penetration of our higher-fee Executive Membership program and the additional membership sign-ups at the 20 net new warehouses opened during 2011. Our member renewal rates are consistent with recent years, currently at 89% in the U.S. and Canada, and approximately 86% on a worldwide basis.

Foreign currencies strengthened against the U.S. dollar, which positively impacted membership fees in 2011 by approximately $30.

2010 vs. 2009

Membership fees increased 10.3% in 2010 compared to 2009. Membership fees in 2010 were positively impacted due to the increased penetration of our higher-fee Executive Membership program, the continued benefit of membership sign-ups at warehouses opened in 2009, a 2009 $27 charge to membership fees related to a litigation settlement concerning our membership renewal policy, and the additional membership sign-ups at the 13 net new warehouses opened in 2010. Our member renewal rate at the end of 2010 was 88% in the U.S. and Canada. Foreign currencies strengthened against the U.S. dollar in 2010, which positively impacted membership fees by approximately $36.

Gross Margin

	2011			2010			2009
Gross margin	$	9,309		$	8,260		$	7,554
Gross margin increase		12.7	%		9.4	%		1.1	%
Gross margin as a percent of net sales		10.69	%		10.83	%		10.81	%

2011 vs. 2010

Gross margin as a percent of net sales decreased 14 basis points compared to 2010. Gross margin for core merchandise categories (food and sundries, hardlines, softlines, and fresh foods), when expressed as a percent of core merchandise sales, rather than total net sales, increased 18 basis points, primarily due to hardlines and food and sundries. However, when the core merchandise gross margin is expressed as a percentage of total net sales, it decreased two basis points from the prior year due primarily to the increased sales penetration of the lower-margin gasoline business. Warehouse ancillary and other businesses gross margins decreased by two basis points as a percent of total net sales. The gross margin comparison was negatively impacted by $87 or 10 basis points due to a LIFO inventory charge recorded in 2011. The charge resulted from higher costs for our merchandise inventories, primarily food and sundries and gasoline. There was no LIFO inventory charge recorded in 2010.

Excluding the impact of consolidating Mexico, the gross margin comparison as a percent of net sales would have been a decrease of 18 basis points during 2011. Foreign currencies strengthened against the U.S. dollar, which positively impacted gross margin in 2011 by approximately $149.

2010 vs. 2009

Gross margin as a percent of net sales increased two basis points compared to 2009. Gross Margin for core merchandise categories, when expressed as a percent of core merchandise sales, rather than

24

Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations (dollars in millions, except per share and warehouse number data) (Continued)

total net sales, increased 25 basis points year-over-year, with all categories showing increases. However, the increased sales penetration of the lower margin gasoline business caused this increase to be only six basis points when expressed as a percent of total net sales. Warehouse ancillary businesses gross margins increased by three basis points as a percent of total net sales. In addition, gross margin comparisons were negatively impacted by five basis points due to a favorable $32 LIFO adjustment in 2009 compared to no LIFO adjustment in 2010. Increased penetration of the Executive Membership two-percent reward program and increased spending by Executive Members negatively affected gross margin by two basis points. Foreign currencies strengthened against the U.S. dollar in 2010, which positively impacted gross margin by approximately $183.

Selling, General and Administrative Expenses

	2011			2010			2009
Selling, general and administrative expenses	$	8,682		$	7,840		$	7,252
SG&A as a percent of net sales		9.97	%		10.28	%		10.38	%

2011 vs. 2010

SG&A expenses as a percent of net sales decreased 31 basis points compared to 2010; excluding the effect of gasoline price inflation on net sales, the decrease was 11 basis points. The year-over-year decrease was due to a 15 basis point improvement in our warehouse operating costs, largely payroll. This improvement was partially offset by a non-recurring benefit of $24, or three basis points, recorded in fiscal 2010 related to the refund of a previously recorded Canadian employee tax liability.

The consolidation of Mexico, which compared to our other operating segments has lower SG&A expenses as a percent of its own net sales, favorably impacted SG&A expenses as a percent of net sales by seven basis points in 2011. Foreign currencies strengthened against the U.S. dollar, which negatively impacted SG&A during 2011 by approximately $116.

2010 vs. 2009

SG&A expenses as a percent of net sales improved ten basis points compared to 2009; excluding the effect of gasoline price inflation on net sales SG&A expense increased three basis points. Warehouse operating costs, excluding the effect of gasoline price inflation, increased seven basis points, primarily due to higher employee benefit costs, particularly employee healthcare and workers’ compensation. SG&A expense comparisons were positively impacted by six basis points related to: a $24 refund of a previously recorded Canadian employee tax liability; and a $23 charge recorded in 2009 to write down the net realizable value of the cash surrender value of employee life insurance contracts with no comparable charge in 2010. Foreign currencies strengthened against the U.S. dollar, which negatively impacted SG&A for 2010 by approximately $140.

Preopening Expenses

	2011		2010		2009
Preopening expenses	$	46	$	26	$	41
Warehouse openings, including relocations		24		14		19

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Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations (dollars in millions, except per share and warehouse number data) (Continued)

Preopening expenses include costs incurred for startup operations related to new warehouses and the expansion of ancillary operations at existing warehouses. Preopening expenses can vary due to the number of warehouse openings, the timing of the opening relative to our year-end, whether the warehouse is owned or leased, and whether the opening is in an existing, new, or international market.

Provision for Impaired Assets and Closing Costs, Net

	2011		2010		2009
Warehouse closing expenses	$	8	$	6	$	9
Impairment of long-lived assets		1		2		8
Provision for impaired assets & closing costs, net	$	9	$	8	$	17

This provision primarily includes costs related to: impairment of long-lived assets; future lease obligations, including contract termination costs, of warehouses that have been closed or relocated to new facilities; and accelerated depreciation, based on the shortened useful life through the expected closing date, on buildings to be demolished or sold and that are not otherwise impaired. The impairment charge in 2009 primarily related to the closing of our two Costco Home locations.

At the end of 2011 and 2010, the reserve for warehouse closing costs was $5, and primarily related to future lease obligations and other contractual obligations associated with exiting the properties.

Interest Expense

	2011		2010		2009
Interest expense	$	116	$	111	$	108

Interest expense primarily relates to our $900 of 5.3% and $1,100 of 5.5% Senior Notes (2007 Senior Notes) issued in fiscal 2007. The 5.3% Senior Notes are due March 15, 2012.

Interest Income and Other, Net

	2011		2010		2009
Interest income	$	41	$	23	$	27
Earnings of affiliates and other, net		19		65		31
Interest income and other, net	$	60	$	88	$	58

2011 vs. 2010

The increase in interest income year-over-year was attributable to increases in our cash and cash equivalents, including short-term investments, slightly higher interest rates, and the consolidation of our Mexico operations. The decrease in earnings of affiliates and other, net is primarily due to the previously discussed change in the accounting treatment of Mexico (see discussion in Note 1 to the consolidated financial statements included in Item 8 of this Report). In addition, there were net gains from foreign currency transactions and from derivative forward foreign currency contracts of $9 and $14 during 2011 and 2010, respectively. See Derivatives section in Note 1 to the consolidated financial statements included in Item 8 of this Report.

26

Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations (dollars in millions, except per share and warehouse number data) (Continued)

2010 vs. 2009

The decrease in interest income was due to lower interest rates on our cash and cash equivalents and short-term investment balances. Interest income also includes a $12 other-than-temporary impairment loss recognized on certain securities within our investment portfolio in 2009. No impairment was recognized in 2010.

The increase in earnings of affiliates and other was primarily due to an increase in earnings from Mexico, which increased due to stronger sales and the Mexican peso strengthening against the U.S. dollar. In addition, there were net gains (losses) from foreign currency transactions and from derivative forward foreign currency contracts of $14 and ($5) in 2010 and 2009, respectively.

Provision for Income Taxes

	2011			2010			2009
Income tax expense	$	841		$	731		$	628
Effective tax rate		35.3	%		35.6	%		36.4	%

The effective tax rate for 2011 was positively impacted by a tax refund received by Mexico. This benefit was offset by various discrete items recognized throughout the year.

The decline in the effective tax rate from 2009 to 2010 was primarily attributable to a change in the mix of earnings between domestic and international operations. The 2009 effective tax rate also included the unfavorable impact of a write-down on investments that were non-deductible for tax purposes.

LIQUIDITY AND CAPITAL RESOURCES (dollars in millions, except per share data)

Cash Flows

The following table itemizes components of our most liquid assets:

	2011		2010
Cash and cash equivalents	$	4,009	$	3,214
Short-term investments		1,604		1,535
Total	$	5,613	$	4,749

Our primary sources of liquidity are cash flows generated from warehouse operations and cash and cash equivalents and short-term investment balances. Of these balances, approximately $982 and $862 at the end of 2011 and 2010, respectively, represented debit and credit card receivables, primarily related to sales in the week prior to the end of our fiscal year.

Net cash provided by operating activities totaled $3,198 in 2011 compared to $2,780 in 2010, an increase of $418. This increase was primarily attributable to a $219 increase in net income including noncontrolling interests, an $87 increase from the change in other current operating assets and liabilities, a $77 increase in deferred income taxes, and a $60 increase in depreciation and amortization, partially offset by an increase in our net investment in merchandise inventories (merchandise inventories less accounts payable) of $70.

Net cash used in investing activities totaled $1,180 in 2011 compared to $2,015 in 2010, a decrease of $835. This decrease in cash used was primarily attributable to an $896 decrease in cash used in the

27

Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations (dollars in millions, except per share and warehouse number data) (Continued)

net investment in short-term investments and a $165 cash increase representing the cash and cash equivalents on Mexico’s balance sheet as of August 29, 2010, partially offset by an increase in cash used for capital expenditures of $235. Mexico was consolidated as of the beginning of fiscal 2011 due to the adoption of a new accounting standard. See discussion in Note 1 to the consolidated financial statements included in Item 8 of this Report.

Net cash used in financing activities totaled $1,277 in 2011 compared to $719 in 2010, an increase of $558. This increase was primarily attributable to a $73 increase in cash used to repurchase Costco’s common stock and a $519 reduction in the amount of bank checks outstanding. The reduction in bank checks outstanding is due to maintaining higher balances in banks on which our checks are drawn.

Exchange rate changes increased cash and cash equivalents by $54 in 2011, compared to an increase of $11 in 2010, an increase of $43. This increase was due to the strengthening of foreign currencies against the U.S. dollar during 2011.

Management believes that our current cash position and operating cash flows will be sufficient to meet our capital requirements for the foreseeable future. We have not provided for U.S. deferred taxes on cumulative undistributed earnings of $2,646 and $1,972 at the end of 2011 and 2010, respectively, of certain non-U.S. consolidated subsidiaries and other entities, including our 50% owned investment in Mexico, as such earnings are deemed by us to be indefinitely reinvested. Cash and cash equivalents and short-term investments held by these consolidated subsidiaries and other entities may not be available to be used for certain financing activities such as the repayment of short-term debt or to repurchase common stock. At August 28, 2011, cash and cash equivalent balances and short-term investments of $1,828 were held by these non-U.S. consolidated subsidiaries and other entities.

Dividends

In April 2011, our Board of Directors increased our quarterly cash dividend from $0.205 to $0.24 per share. Our quarterly cash dividends paid in 2011 totaled $0.89 per share, as compared to $0.77 per share in 2010.

28

Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations (dollars in millions, except per share and warehouse number data) (Continued)

Contractual Obligations

As of August 28, 2011, our commitments to make future payments under contractual obligations were as follows:

	Payments Due by Fiscal Year
Contractual obligations	2012		2013 to 2014		2015 to 2016		2017 and thereafter		Total
Purchase obligations (merchandise)(1)	$	5,879	$	—	$	—	$	—	$	5,879
Long-term debt(2)		1,011		126		126		1,329		2,592
Operating leases(3)		183		357		317		1,850		2,707
Purchase obligations (property, equipment, services and other)(4)		324		71		19		—		414
Construction commitments		191		—		—		—		191
Capital lease obligations(2)		13		26		26		311		376
Other(5)		5		4		2		32		43
Total	$	7,606	$	584	$	490	$	3,522	$	12,202

⁽¹⁾  Includes open merchandise purchase orders.

⁽²⁾  Includes contractual interest payments.

⁽³⁾  Operating lease obligations exclude amounts commonly referred to as common area maintenance, taxes, and insurance and have been reduced by $183 to reflect sub-lease income.

⁽⁴⁾  The amounts exclude certain services negotiated at the individual warehouse or regional level that are not significant and generally contain clauses allowing for cancellation without significant penalty.

⁽⁵⁾  Consists of $31 in asset retirement obligations, $9 in deferred compensation obligations and $3 of current unrecognized tax benefits relating to uncertain tax positions. The total amount excludes $50 of noncurrent unrecognized tax benefits due to uncertainty regarding the timing of future cash payments.

Expansion Plans

Our primary requirement for capital is the financing of land, buildings, and equipment costs for new and remodeled warehouses. To a lesser extent, capital is required for initial warehouse operations and working capital. While there can be no assurance that current expectations will be realized and plans are subject to change upon further review, it is our current intention to spend approximately $1,400 to $1,600 during fiscal 2012 for real estate, construction, remodeling, and equipment for warehouses and related operations. These expenditures are expected to be financed with a combination of cash provided from operations and existing cash and cash equivalents and short-term investments.

We plan to open up to 20 net new warehouses in 2012, and at least one relocation of an existing warehouse to a larger and better-located facility. In addition, the closed warehouse in Japan is expected to re-open in the third quarter of fiscal 2012.

We opened 20 net new warehouses in 2011 and spent $1,290 on capital expenditures.

29

Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations (dollars in millions, except per share and warehouse number data) (Continued)

Bank Credit Facilities and Commercial Paper Programs

	Credit Facility Description	Expiration Date	Credit Line Activity at August 28, 2011										Applicable Interest Rate
Entity			Total of all Credit Facilities		Stand-by Letter of Credit (LC) & Letter of Guaranty		Commercial LC		Short- Term Borrowing		Available Credit
U.S.	Uncommitted Standby LC	N/A	$	17	$	17	$	—	$	—	$	—		N/A
U.S.	Uncommitted Commercial LC	N/A		50		—		21		—		29		N/A
Australia(1)	Guarantee Line	N/A		10		2		—		—		8		N/A
Canada(1)(3)	Multi-Purpose Line	N/A		30		22		—		—		8		2.35	%
Japan(1)(4)	Revolving Credit	February-12		72		—		—		—		72		0.58	%
Japan(1)	Bank Guaranty	March-12		20		20		—		—		—		N/A
Japan(1)	Revolving Credit	February-12		46		—		—		—		46		0.58	%
Japan(2)	Commercial LC	N/A		1		—		—		—		1		N/A
Korea(1)	Multi-Purpose Line	March-12		11		1		1		—		9		4.39	%
Mexico	Commercial LC	October-11		3		—		—		—		3		N/A
Mexico	Commercial LC	N/A		3		—		—		—		3		N/A
Taiwan	Multi-Purpose Line	January-12		24		10		—		—		14		2.75	%
Taiwan	Multi-Purpose Line	July-12		17		3		—		—		14		2.79	%
United Kingdom	Uncommitted Money Market Line	N/A		32		—		—		—		32		3.10	%
United Kingdom	Uncommitted Overdraft Line	N/A		49		—		—		—		49		1.50	%
United Kingdom(2)	Letter of Guarantee	N/A		3		3		—		—		—		N/A
United Kingdom	Commercial LC	N/A		3		1		—		—		2		N/A
		TOTAL	$	391	$	79	$	22	$	—	$	290

⁽¹⁾  The U.S. parent company, Costco Wholesale Corporation, guarantees this entity’s credit facility.

⁽²⁾  Obligations under this facility are fully cash-collateralized by the subsidiary.

⁽³⁾  The bank may cancel or restrict availability under this facility with 45-days written notice.

⁽⁴⁾  This credit facility’s total facility amount will decrease to approximately $26 in November 2011.

30

Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations (dollars in millions, except per share and warehouse number data) (Continued)

	Credit Facility Description	Expiration Date	Credit Line Usage at August 29, 2010										Applicable Interest Rate
Entity			Total of all Credit Facilities		Stand-by Letter of Credit (LC) & Letter of Guaranty		Commercial LC		Short- Term Borrowing		Available Credit
U.S.	Uncommitted Standby LC	N/A	$	22	$	22	$	—	$	—	$	—		N/A
U.S.	Uncommitted Commercial LC	N/A		50		—		9		—		41		N/A
Australia(1)	Guarantee Line	N/A		9		—		—		—		9		N/A
Canada(1)(3)	Multi-Purpose Line	N/A		28		16		—		—		12		2.25	%
Japan(1)	Revolving Credit	March-11		41		—		—		13		28		0.61	%
Japan(1)	Bank Guaranty	March-11		18		18		—		—		—		N/A
Japan(1)	Revolving Credit	February-11		41		—		—		13		28		0.61	%
Japan(2)	Commercial LC	N/A		1		—		—		—		1		N/A
Korea(1)	Multi-Purpose Line	March-11		10		2		—		—		8		3.63	%
Taiwan	Multi-Purpose Line	January-11		22		5		—		—		17		2.63	%
Taiwan	Multi-Purpose Line	July-11		16		3		—		—		13		2.65	%
United Kingdom	Uncommitted Money Market Line	N/A		31		—		—		—		31		3.05	%
United Kingdom	Uncommitted Overdraft Line	N/A		46		—		—		—		46		1.50	%
United Kingdom(2)	Letter of Guarantee	N/A		3		3		—		—		—		N/A
United Kingdom	Commercial LC	N/A		3		1		—		—		2		N/A
		TOTAL	$	341	$	70	$	9	$	26	$	236

⁽¹⁾  The U.S. parent company, Costco Wholesale Corporation, guarantees this entity’s credit facility.

⁽²⁾  Obligations under this facility are fully cash-collateralized by the subsidiary.

⁽³⁾  The bank may cancel or restrict availability under this facility with 45-days written notice.

For those entities with multi-purpose lines, any issuance of either letters of credit or short-term borrowings will result in a corresponding decrease in available credit. Our letter of credit facilities consisted of the following at August 28, 2011 and August 29, 2010:

	2011		2010
Total credit facilities for commercial and standby letter of credit	$	138	$	123
Outstanding commitments under these facilities(1)		101		79

⁽¹⁾  Includes $79 and $70 of standby letters of credit at the end of 2011 and 2010, respectively.

31

Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations (dollars in millions, except per share and warehouse number data) (Continued)

Financing Activities

In March 2011, we reclassified our $900 5.3% Senior Notes due March 15, 2012, originally issued in February 2007, to a current liability within the current portion of long-term debt within the consolidated balance sheets to reflect its maturity of less than one year. Upon maturity, we intend to repay the outstanding principal balance and associated interest with our existing liquidity sources of cash and cash equivalents and short-term investments balances.

In April 2010, our Japanese subsidiary paid the outstanding principal and interest balances totaling $44 related to the 0.92% promissory notes due April 2010, originally issued in April 2003.

In June 2008, our Japanese subsidiary entered into a ten-year term loan in the amount of $39, with a variable rate of interest of Yen TIBOR (6-month) plus a 0.35% margin (0.79% and 0.84% at the end of 2011 and 2010, respectively) on the outstanding balance. Interest is payable semi-annually in December and June and principal is due in June 2018.

In October 2007, our Japanese subsidiary issued promissory notes through a private placement in the amount of $85, bearing interest at 2.695%. Interest is payable semi-annually, and principal is due in October 2017. We guarantee all of the financial instruments issued by our Japanese subsidiary.

In February 2007, we issued $900 of 5.3% Senior Notes due March 15, 2012 (2012 Notes) at a discount of $2 and $1,100 of 5.5% Senior Notes due March 15, 2017 (2017 Notes) at a discount of $6 (together the 2007 Senior Notes). Interest on the 2007 Senior Notes is payable semi-annually on March 15 and September 15 of each year. The discount and issuance costs associated with the 2007 Senior Notes are being amortized to interest expense over the terms of those notes. At our option, we may redeem the 2007 Senior Notes at any time, in whole or in part, at a redemption price plus accrued interest. The redemption price is equal to the greater of 100% of the principal amount of the 2007 Senior Notes to be redeemed, or the sum of the present values of the remaining scheduled payments of principal and interest to maturity. Additionally, we will be required to make an offer to purchase the 2007 Senior Notes at a price of 101% of the principal amount plus accrued and unpaid interest to the date of repurchase, upon certain events as defined by the terms of the 2007 Senior Notes.

In August 1997, we sold $900 principal amount at maturity 3.5% Zero Coupon Convertible Subordinated Notes (Zero Coupon Notes) due in August 2017. The Zero Coupon Notes were priced with a yield to maturity of 3.5%, resulting in gross proceeds to the Company of $450. The remaining Zero Coupon Notes outstanding are convertible into a maximum of 878,000 shares of Costco Common Stock at an initial conversion price of $22.71. Holders of the Zero Coupon Notes may require us to purchase the Zero Coupon Notes (at the discounted issue price plus accrued interest to date of purchase) in August 2012. At our option, we may redeem the Zero Coupon Notes (at the discounted issue price plus accrued interest to date of redemption) any time after August 2002. As of August 28, 2011, $862 in principal amount of Zero Coupon Notes had been converted by note holders into shares of Costco Common Stock, of which the principal converted during 2011, 2010 and 2009 is detailed in the table below:

	2011		2010		2009
Principal converted during period	$	3	$	1	$	25
Principal converted, including the related debt discount	$	2	$	1	$	19
Shares issued upon conversion (000’s)		65		18		562

32

Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations (dollars in millions, except per share and warehouse number data) (Continued)

Derivatives

We are exposed to foreign currency exchange-rate fluctuations in the normal course of business. We manage these fluctuations, in part, through the use of forward foreign-exchange contracts, seeking to economically hedge the impact of fluctuations of foreign-exchange on known future expenditures denominated in a foreign currency. The contracts are intended primarily to economically hedge our exposure to U.S. dollar merchandise inventory expenditures made by our international subsidiaries or other entities whose functional currency is other than the U.S. dollar. Currently, these contracts do not qualify for derivative hedge accounting. We seek to mitigate risk with the use of these contracts and do not intend to engage in speculative transactions. These contracts do not contain any credit-risk-related contingent features.

We seek to manage counterparty risk associated with these contracts by limiting transactions to counterparties with which we have established banking relationships. There can be no assurance, however, that this practice effectively mitigates counterparty risk. These contracts are limited to less than one year in duration. See Note 1 and Note 3 to the consolidated financial statements included in Item 8 of this Report for additional information on the fair value of open, unsettled forward foreign-exchange contracts as of August 28, 2011, and August 29, 2010.

We are exposed to risks due to fluctuations in prices for energy that we consume, particularly electricity and natural gas, which we seek to partially mitigate through the use of fixed-price contracts for approximately 36% of our warehouses and other facilities, primarily in the U.S. and Canada. We also enter into variable-priced contracts for some purchases of natural gas, in addition to fuel for our gas stations, on an index basis. These contracts meet the characteristics of derivative instruments but generally qualify for the “normal purchases or normal sales” exception under authoritative guidance and thus require no mark-to-market adjustment.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have had, or are reasonably likely to have, a material current or future effect on our financial condition or consolidated financial statements.

Stock Repurchase Programs

In April 2011, our Board of Directors authorized a new stock repurchase program in the amount of $4,000, expiring in April 2015, bringing total authorizations by our Board of Directors since inception of the program in 2001 to $10,800. The authorization in April 2011 revoked previously authorized but unused amounts totaling $792.

During 2011, we repurchased 8,939,000 shares of common stock, at an average price of $71.74 per share, totaling approximately $641. During 2010, we repurchased 9,943,000 shares of common stock, at an average price of $57.14 per share, totaling approximately $568. The remaining amount available to be purchased under our approved plan was $3,706 at the end of 2011. Purchases are made from time-to-time, as conditions warrant, in the open market or in block purchases and pursuant to plans under SEC Rule 10b5-1. Repurchased shares are retired, in accordance with the Washington Business Corporation Act.

Critical Accounting Policies

The preparation of our financial statements requires that we make estimates and judgments. We continue to review our accounting policies and evaluate our estimates, including those related to revenue

33

Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations (dollars in millions, except per share and warehouse number data) (Continued)

recognition, investments, merchandise inventory valuation, impairment of long-lived assets, warehouse closing costs, insurance/self-insurance liabilities, and income taxes. We base our estimates on historical experience and on assumptions that we believe to be reasonable.

Revenue Recognition

We generally recognize sales, net of estimated returns, at the time the member takes possession of merchandise or receives services. When we collect payment from customers prior to the transfer of ownership of merchandise or the performance of services, the amount received is generally recorded as deferred revenue on the consolidated balance sheets until the sale or service is completed. We provide for estimated sales returns based on historical trends in merchandise returns, net of the estimated net realizable value of merchandise inventories to be returned and any estimated disposition costs. Amounts collected from members that under common trade practices are referred to as sales taxes are recorded on a net basis.

We evaluate whether it is appropriate to record the gross amount of merchandise sales and related costs or the net amount earned as commissions. Generally, when we are the primary obligor, subject to inventory risk, have latitude in establishing prices and selecting suppliers, influence product or service specifications, or have several but not all of these indicators, revenue is recorded on a gross basis. If we are not the primary obligor and do not possess other indicators of gross reporting as noted above, we record the net amounts as commissions earned, which is reflected in net sales.

Membership fee revenue represents annual membership fees paid by our members. We account for membership fee revenue, net of estimated refunds, on a deferred basis, whereby revenue is recognized ratably over the one-year membership period.

Our Executive members qualify for a 2% reward (which can be redeemed only at Costco warehouses), up to a maximum of approximately $500 per year, on qualified purchases made at Costco. We account for this 2% reward as a reduction in sales, with the related liability being classified within other current liabilities. The sales reduction and corresponding liability are computed after giving effect to the estimated impact of non-redemptions based on historical data.

Investments

Investments are reviewed quarterly for indicators of other-than-temporary impairment. This determination requires significant judgment. We employ a methodology that considers available quantitative and qualitative evidence. If the cost of an investment exceeds its fair value, we evaluate, among other factors, general market conditions, the duration and extent to which the fair value is less than cost, and our intent and ability to hold the investment. We also consider specific adverse conditions related to the financial health of and business outlook for the issuer, including industry and sector performance, operational and financing cash flow factors, and rating agency actions. Once a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded and a new cost basis in the investment is established. If market, industry, and/or issuer conditions deteriorate, we may incur future impairments.

Merchandise Inventories

Merchandise inventories are valued at the lower of cost or market, as determined primarily by the retail inventory method, and are stated using the last-in, first-out (LIFO) method for substantially all U.S. merchandise inventories. Merchandise inventories for all foreign operations are primarily valued by the retail inventory method and are stated using the first-in, first-out (FIFO) method. We believe the LIFO method

34

Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations (dollars in millions, except per share and warehouse number data) (Continued)

more fairly presents the results of operations by more closely matching current costs with current revenues. We record an adjustment each quarter, if necessary, for the estimated effect of inflation or deflation, and these estimates are adjusted to actual results determined at year-end. Due to inflation, in 2011 the merchandise inventories valued at LIFO were lower than the FIFO value, resulting in a charge to merchandise costs of $87. During 2009, due to overall net deflationary trends, the Company recorded a $32 benefit to merchandise costs to adjust inventories valued at LIFO. At the end of 2010 and 2009, merchandise inventories valued at LIFO approximated FIFO after considering the lower of cost or market principle.

We provide for estimated inventory losses (shrink) between physical inventory counts as a percentage of net sales. The provision is adjusted periodically to reflect results of the actual physical inventory counts, which generally occur in the second and fourth quarters of the year.

Inventory cost, where appropriate, is reduced by estimates of vendor rebates when earned or as we progress toward earning those rebates, provided they are probable and reasonably estimable. Other consideration received from vendors is generally recorded as a reduction of merchandise costs upon completion of contractual milestones, terms of agreement, or other systematic and rational approaches.

Impairment of Long-Lived Assets and Warehouse Closing costs

We periodically evaluate our long-lived assets for indicators of impairment, such as a decision to relocate or close a warehouse facility. Our judgments are based on existing market and operational conditions. Future events could cause us to conclude that impairment factors exist, requiring a downward adjustment of these assets to their then-current fair market value.

We provide estimates for warehouse closing costs for leased and owned locations to be closed or relocated. Judgment is involved in determining any impairment or our net liability, particularly related to the estimated sales price of owned locations and the potential sublease income at leased locations. These estimates are based on real estate conditions in the markets and our experience in those markets. We make assumptions about the average period of time it would take to sublease the location and the amount of potential sublease income for each leased location. We reassess our liability each quarter and adjust our liability accordingly when our estimates change.

Insurance/Self-Insurance Liabilities

We use a combination of insurance and self-insurance mechanisms, including a wholly-owned captive insurance entity and participation in a reinsurance pool, to provide for potential liabilities for workers’ compensation, general liability, property damage, directors and officers liability, vehicle liability, and employee health care benefits. Liabilities associated with the risks that we retain are not discounted and are estimated, in part, by considering historical claims experience, demographic factors, severity factors and other actuarial assumptions. The estimated accruals for these liabilities could be significantly affected if future occurrences and claims differ from these assumptions and historical trends.

Income Taxes

The determination of our provision for income taxes requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. Significant judgment is required in assessing the timing and amounts of deductible and taxable items and the probability of sustaining uncertain tax positions. The benefits associated with uncertain tax positions are recorded in our consolidated financial statements only after determining a more-likely-than-not probability that the positions will withstand challenge from tax authorities. When facts and circumstances change, we reassess these probabilities and record any changes in the consolidated financial statements as appropriate.

35

Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations (dollars in millions, except per share and warehouse number data) (Continued)

Recent Accounting Pronouncements

See discussion of Recent Accounting Pronouncements in Note 1 to the consolidated financial statements included in Item 8 of this Report.

Item 7A—Quantitative and Qualitative Disclosures About Market Risk

We are exposed to financial market risk resulting from fluctuations in interest and foreign currency exchange rates. We do not engage in speculative or leveraged transactions or hold or issue financial instruments for trading purposes.

Interest Rate Risk

Our exposure to market risk for changes in interest rates relates primarily to our investment holdings that are diversified among money market funds, U.S. government and agency securities, Federal Deposit Insurance Corporation insured corporate notes, and corporate notes and bonds with effective maturities of generally three months to five years at the date of purchase. The primary objective of our investment activities is to preserve principal and secondarily to generate yields. The majority of our short-term investments are in fixed interest rate securities. These securities are subject to changes in fair value due to interest rate fluctuations. A revised investment policy was approved in December 2007 by our Board of Directors, limiting future investments to direct U.S. government and government agency obligations, repurchase agreements collateralized by U.S. government and government agency obligations, and U.S. government and government agency money market funds.

The investment policies of our subsidiaries are consistent with our primary objective to preserve principal and secondarily to generate yields. Our wholly-owned insurance subsidiary invests in U.S. government and government agency obligations, corporate notes and bonds, and asset and mortgage-backed securities with a minimum overall portfolio average credit rating of AA+. All of our foreign subsidiaries’ investments are primarily in money market funds, investment grade securities, bankers’ acceptances, bank certificates of deposit and term deposits, all denominated in their local currencies. Additionally, our Canadian subsidiary may invest a portion of its investments in U.S. dollar investment grade securities and bank term deposits to meet current U.S. dollar obligations.

Because most of our investments in cash and cash equivalents are short-term, interest rate changes are less likely to be material to our financial statements. Based on our overnight investments and bank balances within cash and cash equivalents at the end of 2011 and 2010, a 100 basis point increase or decrease in interest rates would result in an increase or decrease of approximately $29 and $23 (pre-tax), respectively, to interest income on an annual basis. For those investments that are classified as available-for-sale, the unrealized gains or losses related to fluctuations in market volatility and interest rates are reflected within stockholders’ equity in accumulated other comprehensive income.

The nature and amount of our long and short-term debt may vary as a result of future business requirements, market conditions and other factors. As of the end of 2011, our fixed-rate long-term debt included: $1,100 of 5.5% Senior Notes carried at $1,097; $900 of 5.3% Senior Notes carried at $900; $38 principal amount at maturity of 3.5% Zero Coupon Convertible Subordinated Notes carried at $31; and additional notes totaling $86. Additionally, our variable rate long-term debt included a 0.35% over Yen Tibor (6-month) Term Loan of $39. Fluctuations in interest rates may affect the fair value of the fixed-rate debt and may affect the interest expense related to the variable rate debt. See Note 4 to the consolidated financial statements included in Item 8 of this Report for more information on our long and short-term debt.

36

Item 7A—Quantitative and Qualitative Disclosures About Market Risk (Continued)

Foreign Currency-Exchange Risk

Our foreign subsidiaries conduct limited transactions in their non-functional currencies, which exposes us to fluctuations in exchange rates. We manage these fluctuations, in part, through the use of forward foreign exchange contracts, seeking to hedge the impact of fluctuations on known future expenditures denominated in a foreign currency. As of August 28, 2011, and August 29, 2010, we held forward foreign exchange contracts with a notional amount of $247 and $225, respectively. At the end of 2011, the fair value of assets and liabilities recorded on our consolidated balance sheets were $1 and $2, respectively. At the end of 2010, the fair value of assets and liabilities were $1 and $3, respectively. A hypothetical 10% strengthening of the functional currency compared to the non-functional currency exchange rates at August 28, 2011 and August 29, 2010, would have decreased the fair value of the contracts by $25 and $23, respectively.

Item 8—Financial Statements and Supplementary Data

Financial statements of Costco are as follows:

	Page
Reports of Independent Registered Public Accounting Firm		42
Consolidated Balance Sheets, as of August 28, 2011 and August 29, 2010		44
Consolidated Statements of Income, for the 52 weeks ended August 28, 2011, August  29, 2010, and August 30, 2009		45
Consolidated Statements of Equity and Comprehensive Income, for the 52 weeks ended August 28, 2011,  August 29, 2010, and August 30, 2009		46
Consolidated Statements of Cash Flows, for the 52 weeks ended August 28, 2011, August  29, 2010, and August 30, 2009		47
Notes to Consolidated Financial Statements		48

Management’s Report on the Consolidated Financial Statements

Our management is responsible for the preparation, integrity and objectivity of the accompanying consolidated financial statements and the related financial information. The financial statements have been prepared in conformity with U.S. generally accepted accounting principles and necessarily include certain amounts that are based on estimates and informed judgments. Our management also prepared the related financial information included in this Annual Report on Form 10-K and is responsible for its accuracy and consistency with the financial statements.

The consolidated financial statements have been audited by KPMG LLP, an independent registered public accounting firm, who conducted their audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). The independent registered public accounting firm’s responsibility is to express an opinion as to the fairness with which such financial statements present our financial position, results of operations and cash flows in accordance with U.S. generally accepted accounting principles.

Item 9—Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

37

Item 9A—Controls and Procedures

Disclosure Controls and Procedures

As of the end of the period covered by this Annual Report on Form 10-K, we performed an evaluation under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities and Exchange Act of 1934 (the Exchange Act)). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this Annual Report, our disclosure controls and procedures are effective.

There has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) of the Exchange Act) during our most recently completed fiscal year that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.

The certifications required by Section 302 of the Sarbanes-Oxley Act of 2002 are filed as Exhibit 31.1 to this report.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles and includes those policies and procedures that: (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and the dispositions of our assets; (2) provide reasonable assurance that our transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with appropriate authorizations; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Under the supervision and with the participation of our management, we assessed the effectiveness of our internal control over financial reporting as of August 28, 2011, using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework. Based on its assessment, management has concluded that our internal control over financial reporting was effective as of August 28, 2011. The attestation of KPMG LLP, our independent registered public accounting firm, on the effectiveness of our internal control over financial reporting is included with the financial statements in Item 8 of this Report.

/S/ JAMES D. SINEGAL

James D. Sinegal

Chief Executive Officer

/S/ RICHARD A. GALANTI

Richard A. Galanti

Executive Vice President

Chief Financial Officer

Item 9B—Other Information

None.

38

PART III

Item 10—Directors, Executive Officers and Corporate Governance

Information relating to the availability of our code of ethics for senior financial officers and a list of our executive officers appear in Item 1 of this Report. The information required by this Item concerning our directors and nominees for director is incorporated herein by reference to the sections entitled “Proposal 1: Election of Directors,” “Directors,” “Committees of the Board” and “Section 16(a) Beneficial Ownership Reporting Compliance” in Costco’s Proxy Statement for its annual meeting of stockholders to be held on January 26, 2012 (“Proxy Statement”). The Proxy Statement will be filed with the SEC within 120 days of the end of our fiscal year.

Item 11—Executive Compensation

The information required by this Item is incorporated herein by reference to the sections entitled “Compensation of Directors,” “Executive Compensation,” and “Compensation Discussion and Analysis” in Costco’s Proxy Statement.

Item 12—Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this Item is incorporated herein by reference to the sections entitled “Equity Compensation Plan Information” in Costco’s Proxy Statement.

Item 13—Certain Relationships and Related Transactions, and Director Independence

The information required by this Item is incorporated herein by reference to the sections entitled “Proposal 1: Election of Directors,” “Directors,” “Committees of the Board,” “Shareholder Communications to the Board,” “Meeting Attendance,” “Report of the Compensation Committee of the Board of Directors,” “Certain Relationships and Transactions” and “Report of the Audit Committee” in Costco’s Proxy Statement.

Item 14—Principal Accounting Fees and Services

The information required by this Item is incorporated herein by reference to the sections entitled “Independent Public Accountants” in Costco’s Proxy Statement.

PART IV

Item 15—Exhibits, Financial Statement Schedules

(a) Documents filed as part of this report are as follows:

1. Financial Statements:

See the listing of Financial Statements included as a part of this Form 10-K on Item 8 of Part II.

2. Financial Statement Schedules:

All schedules have been omitted because the required information is not present or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the financial statements, including the notes thereto.

3. Exhibits:

The required exhibits are included at the end of the Form 10-K Annual Report and are described in the Exhibit Index immediately preceding the first exhibit.

(b) Financial Statement Schedules—None.

39

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

October 14, 2011

COSTCO WHOLESALE CORPORATION (Registrant)
By	/s/ RICHARD A. GALANTI
	Richard A. Galanti Executive Vice President and Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By	/s/ JAMES D. SINEGAL	October 14, 2011
	James D. Sinegal Chief Executive Officer and Director
By	/s/ JEFFREY H. BROTMAN	October 14, 2011
	Jeffrey H. Brotman Chairman of the Board
By	/s/ W. CRAIG JELINEK	October 14, 2011
	W. Craig Jelinek President, Chief Operating Officer and Director
By	/s/ RICHARD A. GALANTI	October 14, 2011
	Richard A. Galanti Executive Vice President, Chief Financial Officer and Director (Principal Financial Officer)
By	/s/ DAVID S. PETTERSON	October 14, 2011
	David S. Petterson Senior Vice President and Controller (Principal Accounting Officer)
By	/s/ BENJAMIN S. CARSON, SR., M.D.	October 14, 2011
	Benjamin S. Carson, Sr., M.D. Director
By	/s/ SUSAN L. DECKER	October 14, 2011
	Susan L. Decker Director
By	/S/ DANIEL J. EVANS	October 14, 2011
	Daniel J. Evans Director

40

By	/S/ WILLIAM H. GATES	October 14, 2011
	William H. Gates Director
By	/S/ HAMILTON E. JAMES	October 14, 2011
	Hamilton E. James Director
By	/S/ RICHARD M. LIBENSON	October 14, 2011
	Richard M. Libenson Director
By	/S/ JOHN W. MEISENBACH	October 14, 2011
	John W. Meisenbach Director
By	/S/ CHARLES T. MUNGER	October 14, 2011
	Charles T. Munger Director
By	/S/ JEFFREY S. RAIKES	October 14, 2011
	Jeffrey S. Raikes Director
By	/S/ JILL S. RUCKELSHAUS	October 14, 2011
	Jill S. Ruckelshaus Director

41

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders

Costco Wholesale Corporation:

We have audited the accompanying consolidated balance sheets of Costco Wholesale Corporation and subsidiaries as of August 28, 2011 and August 29, 2010 and the related consolidated statements of income, equity and comprehensive income and cash flows for each of the 52-week periods ended August 28, 2011, August 29, 2010, and August 30, 2009. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Costco Wholesale Corporation and subsidiaries as of August 28, 2011 and August 29, 2010, and the results of their operations and their cash flows for the 52-week periods ended August 28, 2011, August 29, 2010, and August 30, 2009, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of August 28, 2011, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated October 14, 2011 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

/s/ KPMG LLP

Seattle, Washington

October 14, 2011

42

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders

Costco Wholesale Corporation:

We have audited Costco Wholesale Corporation’s internal control over financial reporting as of August 28, 2011, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying management’s annual report on internal control over financial reporting included in Item 9A. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of August 28, 2011, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of the Company as of August 28, 2011 and August 29, 2010, and the related consolidated statements of income, equity and comprehensive income, and cash flows for each of the 52-week periods ended August 28, 2011, August 29, 2010, and August 30, 2009, and our report dated October 14, 2011 expressed an unqualified opinion on those consolidated financial statements.

/s/ KPMG LLP

Seattle, Washington

October 14, 2011

43

COSTCO WHOLESALE CORPORATION

CONSOLIDATED BALANCE SHEETS

(dollars in millions, except par value and share data)

	August 28, 2011			August 29, 2010
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	4,009		$	3,214
Short-term investments		1,604			1,535
Receivables, net		965			884
Merchandise inventories		6,638			5,638
Deferred income taxes and other current assets		490			437
Total current assets		13,706			11,708
PROPERTY AND EQUIPMENT
Land		3,819			3,484
Buildings and improvements		10,278			9,096
Equipment and fixtures		4,002			3,513
Construction in progress		269			267
		18,368			16,360
Less accumulated depreciation and amortization		(5,936	)		(5,046	)
Net property and equipment		12,432			11,314
OTHER ASSETS		623			793
TOTAL ASSETS	$	26,761		$	23,815
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term borrowings	$	0		$	26
Accounts payable		6,544			5,947
Current portion of long-term debt		900			0
Accrued salaries and benefits		1,758			1,571
Accrued sales and other taxes		335			322
Other current liabilities		1,540			1,328
Deferred membership fees		973			869
Total current liabilities		12,050			10,063
LONG-TERM DEBT, excluding current portion		1,253			2,141
DEFERRED INCOME TAXES AND OTHER LIABILITIES		885			681
Total liabilities		14,188			12,885
COMMITMENTS AND CONTINGENCIES
EQUITY
Preferred stock $.005 par value; 100,000,000 shares authorized; no shares issued and outstanding		0			0
Common stock $.005 par value; 900,000,000 shares authorized 434,266,000 and 433,510,000 shares issued and outstanding		2			2
Additional paid-in capital		4,516			4,115
Accumulated other comprehensive income		373			122
Retained earnings		7,111			6,590
Total Costco stockholders’ equity		12,002			10,829
Noncontrolling interests		571			101
Total equity		12,573			10,930
TOTAL LIABILITIES AND EQUITY	$	26,761		$	23,815

The accompanying notes are an integral part of these consolidated financial statements.

44

COSTCO WHOLESALE CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(dollars in millions, except per share data)

	52 weeks ended August 28, 2011			52 weeks ended August 29, 2010			52 weeks ended August 30, 2009
REVENUE
Net sales	$	87,048		$	76,255		$	69,889
Membership fees		1,867			1,691			1,533
Total revenue		88,915			77,946			71,422
OPERATING EXPENSES
Merchandise costs		77,739			67,995			62,335
Selling, general and administrative		8,682			7,840			7,252
Preopening expenses		46			26			41
Provision for impaired assets and closing costs, net		9			8			17
Operating income		2,439			2,077			1,777
OTHER INCOME (EXPENSE)
Interest expense		(116	)		(111	)		(108	)
Interest income and other, net		60			88			58
INCOME BEFORE INCOME TAXES		2,383			2,054			1,727
Provision for income taxes		841			731			628
Net income including noncontrolling interests		1,542			1,323			1,099
Net income attributable to noncontrolling interests		(80	)		(20	)		(13	)
NET INCOME ATTRIBUTABLE TO COSTCO	$	1,462		$	1,303		$	1,086
NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO:
Basic	$	3.35		$	2.97		$	2.50
Diluted	$	3.30		$	2.92		$	2.47
Shares used in calculation (000’s)
Basic		436,119			438,611			433,988
Diluted		443,094			445,970			440,454
Dividends per share	$	0.89		$	0.77		$	0.68

The accompanying notes are an integral part of these consolidated financial statements.

45

COSTCO WHOLESALE CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY

AND COMPREHENSIVE INCOME

(dollars in millions)

	Common Stock					Additional Paid-in Capital			Accumulated Other Comprehensive Income			Retained Earnings			Total Costco Stockholders’ Equity			Noncontrolling Interests			Total Equity
	Shares (000’s)			Amount
BALANCE AT AUGUST 31, 2008		432,513		$	2	$	3,543		$	288		$	5,361		$	9,194		$	80		$	9,274
Comprehensive Income:
Net income													1,086			1,086			13			1,099
Unrealized gain on short-term investments, net of ($2) tax										3						3			0			3
Foreign-currency translation adjustment and other										(181	)					(181	)		(4	)		(185	)
Comprehensive income																908			9			917
Stock options exercised and release of vested restricted stock units, including tax effects		3,794			0		75									75						75
Conversion of convertible notes		562			0		19									19						19
Repurchases of common stock		(895	)		0		(7	)					(50	)		(57	)					(57	)
Stock-based compensation							181									181						181
Cash dividends													(296	)		(296	)					(296	)
Distribution to noncontrolling interest																			(9	)		(9	)
BALANCE AT AUGUST 30, 2009		435,974			2		3,811			110			6,101			10,024			80			10,104
Comprehensive Income:
Net income													1,303			1,303			20			1,323
Unrealized gain on short-term investments, net of ($1) tax										3						3			0			3
Foreign-currency translation adjustment and other										9						9			1			10
Comprehensive income																1,315			21			1,336
Stock options exercised and release of vested restricted stock units, including tax effects		7,461			0		205									205						205
Conversion of convertible notes		18			0		1									1						1
Repurchases of common stock		(9,943	)		0		(92	)					(476	)		(568	)					(568	)
Stock-based compensation							190									190						190
Cash dividends													(338	)		(338	)					(338	)
BALANCE AT AUGUST 29, 2010		433,510			2		4,115			122			6,590			10,829			101			10,930
Initial consolidation of noncontrolling interest in Costco Mexico																0			357			357
Comprehensive Income:
Net income													1,462			1,462			80			1,542
Unrealized gain on short-term investments, net of ($1) tax										1						1			0			1
Foreign-currency translation adjustment and other										250						250			24			274
Comprehensive income																1,713			104			1,817
Stock options exercised and release of vested restricted stock units, including tax effects		9,630			0		281									281						281
Conversion of convertible notes		65			0		2									2						2
Repurchases of common stock		(8,939	)		0		(89	)					(552	)		(641	)					(641	)
Stock-based compensation							207									207						207
Cash dividends													(389	)		(389	)					(389	)
Investment by noncontrolling interest																			9			9
BALANCE AT AUGUST 28, 2011		434,266		$	2	$	4,516		$	373		$	7,111		$	12,002		$	571		$	12,573

The accompanying notes are an integral part of these consolidated financial statements.

46

COSTCO WHOLESALE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in millions)

	52 Weeks ended August 28, 2011			52 Weeks ended August 29, 2010			52 Weeks ended August 30, 2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net income including noncontrolling interests	$	1,542		$	1,323		$	1,099
Adjustments to reconcile net income including noncontrolling interests to net cash provided by operating activities:
Depreciation and amortization		855			795			728
Stock-based compensation		207			190			181
Undistributed equity earnings in joint ventures		(1	)		(42	)		(33	)
Excess tax benefits on stock-based awards		(45	)		(10	)		(2	)
Other non-cash operating activities, net		24			2			46
Deferred income tax expense		84			7			70
Changes in operating assets and liabilities, net of the initial consolidation of Costco Mexico at the beginning of fiscal 2011:
Increase in merchandise inventories		(642	)		(213	)		(394	)
Increase in accounts payable		804			445			255
Other operating assets and liabilities, net		370			283			142
Net cash provided by operating activities		3,198			2,780			2,092
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment		(1,290	)		(1,055	)		(1,250	)
Increase resulting from initial consolidation of Costco Mexico		165			0			0
Proceeds from the sale of property and equipment		16			4			7
Purchases of short-term investments		(3,276	)		(2,693	)		(1,806	)
Maturities of short-term investments		2,614			1,428			1,780
Sales of investments		602			309			183
Other investing activities, net		(11	)		(8	)		(15	)
Net cash used in investing activities		(1,180	)		(2,015	)		(1,101	)
CASH FLOWS FROM FINANCING ACTIVITIES
Change in bank checks outstanding		(514	)		5			(22	)
Repayments of short-term borrowings		(105	)		(73	)		(1,777	)
Proceeds from short-term borrowings		79			81			1,669
Repayments of long-term debt		0			(84	)		(6	)
Cash dividend payments		(389	)		(338	)		(296	)
Investment by (distribution to) noncontrolling interests		9			0			(9	)
Excess tax benefits on stock-based awards		45			10			2
Proceeds from stock-based awards, net of minimum tax withholdings		224			193			69
Repurchases of common stock		(624	)		(551	)		(69	)
Other financing activities, net		(2	)		38			0
Net cash used in financing activities		(1,277	)		(719	)		(439	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		54			11			(14	)
Net increase in cash and cash equivalents		795			57			538
CASH AND CASH EQUIVALENTS BEGINNING OF YEAR		3,214			3,157			2,619
CASH AND CASH EQUIVALENTS END OF YEAR	$	4,009		$	3,214		$	3,157
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest (reduced by $9, $11, and $8 interest capitalized in 2011, 2010, and 2009, respectively)	$	111		$	110		$	104
Income taxes	$	742		$	637		$	565
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
(Decrease) Increase in accrued property and equipment	$	(10	)	$	24		$	20
Common stock issued upon conversion of 3.5% Zero Coupon Convertible Subordinated Notes	$	2		$	1		$	19
Property acquired under capital leases	$	0		$	90		$	72
Unsettled repurchases of common stock	$	17		$	17		$	0

The accompanying notes are an integral part of these consolidated financial statements.

47

COSTCO WHOLESALE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except share data)

Note 1—Summary of Significant Accounting Policies

Basis of Presentation

The consolidated financial statements include the accounts of Costco Wholesale Corporation, a Washington corporation, its wholly-owned subsidiaries, subsidiaries in which it has a controlling interest, consolidated entities in which it has made equity investments or has other interests through which it has majority-voting control or it exercises the right to direct the activities that most significantly impact the entity’s performance (Costco or the Company). The Company reports noncontrolling interests in consolidated entities as a component of equity separate from the Company’s equity. All material inter-company transactions between and among the Company and its consolidated subsidiaries and other consolidated entities have been eliminated in consolidation.

In June 2009, the Financial Accounting Standards Board (FASB) issued amended guidance concerning whether a company’s variable interest(s) in an entity constitute a controlling financial interest. The Company adopted this guidance on August 30, 2010 (at the beginning of its fiscal year 2011). As a result of the adoption, the Company determined that its 50%-owned joint venture, Costco Mexico (Mexico), would be consolidated on a prospective basis beginning August 30, 2010. Costco operates 32 warehouses in Mexico similar to Costco warehouses operated elsewhere.

Historically, the Company accounted for its 50% interest in Mexico under the equity method of accounting. The Company’s equity method investment in Mexico included in other assets in the accompanying consolidated balance sheet as of August 29, 2010 totaled $357, which was derecognized as part of the initial consolidation of the joint venture on August 30, 2010. Total assets and liabilities increased by approximately 3% due to the initial consolidation and the 50% noncontrolling interest in Mexico of $357 was recorded as a component of equity as a result of the initial consolidation. The initial consolidation of Mexico had no impact on net income or net income per common share attributable to Costco (Net Income). The Company’s net income excludes income attributable to noncontrolling interests in its operations in Mexico, Korea, and Taiwan. In December 2010, the Company and its 50% joint venture partner amended the Mexico joint venture agreements. As a result, the Company obtained, subject to certain continuing conditions, majority-voting control of the joint venture. As the Company had previously consolidated the joint venture, these amendments did not impact the Company’s consolidated financial statements.

The Company operates membership warehouses that offer low prices on a limited selection of nationally branded and select private-label products in a wide range of merchandise categories in no-frills, self-service facilities. At August 28, 2011, Costco operated 592 warehouses worldwide which included: 429 U.S. locations (in 40 U.S. states and Puerto Rico), 82 Canadian locations (in nine Canadian provinces), 32 Mexico locations, 22 United Kingdom locations, nine Japan locations, eight Taiwan locations, seven Korea locations, and three Australia locations.

Fiscal Year End

The Company’s fiscal year ends on the Sunday closest to August 31. References to 2011, 2010, and 2009 relate to the 52-week fiscal years ended August 28, 2011, August 29, 2010, and August 30, 2009, respectively.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported

48

COSTCO WHOLESALE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except share data) (Continued)

Note 1—Summary of Significant Accounting Policies (Continued)

amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions.

Reclassifications

Certain reclassifications have been made to prior fiscal year amounts or balances to conform to the presentation in the current fiscal year. These reclassifications did not have a material impact on the Company’s previously reported consolidated financial statements.

Cash and Cash Equivalents

The Company considers as cash and cash equivalents all highly liquid investments with a maturity of three months or less at the date of purchase and proceeds due from credit and debit card transactions with settlement terms of less than one week. Credit and debit card receivables were $982 and $862 at the end of 2011 and 2010, respectively.

Short-term Investments

In general, short-term investments have a maturity of three months to five years at the date of purchase. Investments with maturities beyond five years may be classified, based on the Company’s determination, as short-term based on their highly liquid nature and because such marketable securities represent the investment of cash that is available for current operations. Short-term investments classified as available-for-sale are recorded at fair value using the specific identification method with the unrealized gains and losses reflected in accumulated other comprehensive income until realized. Realized gains and losses from the sale of available-for-sale securities, if any, are determined on a specific identification basis and all are recorded in interest income and other, net in the consolidated statements of income. Short-term investments classified as held-to-maturity are financial instruments that the Company has the intent and ability to hold to maturity and are reported net of any related amortization and are not remeasured to fair value on a recurring basis.

Fair Value of Financial Instruments

The carrying value of the Company’s financial instruments, including cash and cash equivalents, receivables, and accounts payable approximate fair value due to their short-term nature or variable interest rates. See Notes 2, 3, and 4 for the carrying value and fair value of the Company’s investments, derivative instruments, and fixed rate debt.

The Company follows the authoritative guidance for fair value measurements relating to financial and nonfinancial assets and liabilities, including the presentation of required disclosures, in its consolidated financial statements. This guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The guidance also establishes a fair value hierarchy, which requires maximizing the use of observable inputs when measuring fair value. The three levels of inputs that may be used are:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.

49

COSTCO WHOLESALE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except share data) (Continued)

Note 1—Summary of Significant Accounting Policies (Continued)

Level 3: Significant unobservable inputs that are not corroborated by market data.

The following valuation techniques are used to measure fair value:

Level 1 primarily consists of financial instruments, such as money market mutual funds, whose value is based on quoted market prices, such as quoted net asset values published by the fund as supported in an active market, exchange-traded instruments and listed equities.

Level 2 includes assets and liabilities where quoted market prices are unobservable but observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities, or could be obtained from data providers or pricing vendors. The Company’s Level 2 assets and liabilities primarily include United States (U.S.) government and agency securities, Federal Deposit Insurance Corporation (FDIC) insured corporate bonds, investments in corporate notes and bonds, asset and mortgage-backed securities, and forward foreign exchange contracts. Valuation methodologies are based on “consensus pricing,” using market prices from a variety of industry-standard independent data providers or pricing that considers various assumptions, including time value, yield curve, volatility factors, credit spreads, default rates, loss severity, current market and contractual prices for the underlying instruments or debt, broker and dealer quotes, as well as other relevant economic measures. All are observable in the market or can be derived principally from or corroborated by observable market data, for which the Company typically receives independent external valuation information.

Level 3 is comprised of significant unobservable inputs for valuations from the Company’s independent data and a primary pricing vendor that are also supported by little, infrequent, or no market activity. Management considers indicators of significant unobservable inputs such as the lengthening of maturities, later-than-scheduled payments, and any remaining individual securities that have otherwise matured, as indicators of Level 3. Assets and liabilities are considered Level 3 when their fair value inputs are unobservable, unavailable or management concludes that even though there may be some observable inputs, an item should be classified as a Level 3 based on other indicators of significant unobservable inputs, such as situations involving limited market activity, where determination of fair value requires significant judgment or estimation. The Company utilizes the services of a primary pricing vendor, which does not provide access to its proprietary valuation models, inputs and assumptions. While the Company is not provided access to proprietary models of the vendor, the Company reviewed and contrasted pricing received with other pricing sources to ensure accuracy of each asset class for which prices are provided. The Company’s review also included an examination of the underlying inputs and assumptions for a sample of individual securities across asset classes, credit rating levels and various durations, a process that is continually performed for each reporting period. In addition, the pricing vendor has an established challenge process in place for all security valuations, which facilitates identification and resolution of potentially erroneous prices. The Company believes that the prices received from the primary pricing vendor are representative of exit prices in accordance with authoritative guidance, and are classified appropriately in the fair value hierarchy.

Our current financial liabilities have fair values that approximate their carrying values. Our long-term financial liabilities consist of long-term debt, which is recorded on the balance sheet at issuance price less unamortized discount.

50

COSTCO WHOLESALE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except share data) (Continued)

Note 1—Summary of Significant Accounting Policies (Continued)

Receivables, net

Receivables consist of the following at the end of 2011 and 2010:

	2011			2010
Vendor receivables, and other	$	487		$	448
Reinsurance receivables		201			196
Receivables from governmental entities		98			64
Other receivables		96			103
Third-party pharmacy receivables		86			75
Allowance for doubtful accounts		(3	)		(2	)
Receivables, Net	$	965		$	884

Vendor receivables include payments from vendors in the form of volume rebates or other purchase discounts that are evidenced by signed agreements and are reflected in the carrying value of the inventory when earned or as the Company progresses towards earning the rebate or discount and as a component of merchandise costs as the merchandise is sold. Vendor receivable balances are generally presented on a gross basis separate from any related payable due. In certain circumstances, these receivables may be settled against the related payable to that vendor. Other consideration received from vendors is generally recorded as a reduction of merchandise costs upon completion of contractual milestones, terms of the related agreement, or by other systematic approach.

Reinsurance receivables are held by the Company’s wholly-owned captive insurance subsidiary. The receivable balance represents amounts ceded through reinsurance arrangements, and are reflected on a gross basis, separate from the amounts assumed under reinsurance, which are presented on a gross basis within other current liabilities on the consolidated balance sheets.

Receivables from governmental entities largely consists of various tax related items.

Third-party pharmacy receivables generally relate to amounts due from members’ insurance companies for the amount above their co-pay, which is collected at the point-of-sale.

Amounts are recorded net of an allowance for doubtful accounts. Management determines the allowance for doubtful accounts based on historical experience and application of the specific identification method. Write-offs of receivables were immaterial for fiscal years 2011, 2010, or 2009.

Merchandise Inventories

Merchandise inventories consist of the following at the end of 2011 and 2010:

	2011		2010
United States (primarily LIFO)	$	4,548	$	4,150
Foreign (FIFO)		2,090		1,488
Merchandise Inventories	$	6,638	$	5,638

51

COSTCO WHOLESALE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except share data) (Continued)

Note 1—Summary of Significant Accounting Policies (Continued)

Merchandise inventories are valued at the lower of cost or market, as determined primarily by the retail inventory method, and are stated using the last-in, first-out (LIFO) method for substantially all U.S. merchandise inventories. Merchandise inventories for all foreign operations are primarily valued by the retail inventory method and are stated using the first-in, first-out (FIFO) method. The Company believes the LIFO method more fairly presents the results of operations by more closely matching current costs with current revenues. The Company records an adjustment each quarter, if necessary, for the estimated effect of inflation or deflation, and these estimates are adjusted to actual results determined at year-end.

Due to inflation in 2011, the merchandise inventories valued at LIFO were lower than the FIFO value, resulting in a charge to merchandise costs of $87. During 2009, due to overall net deflationary trends, the Company recorded a $32 benefit to merchandise costs to adjust inventories valued at LIFO. At the end of 2010, merchandise inventories valued at LIFO approximated FIFO after considering the lower of cost or market principle.

The Company provides for estimated inventory losses between physical inventory counts as a percentage of net sales, using estimates based on the Company’s experience. The provision is adjusted periodically to reflect the results of the actual physical inventory counts, which generally occur in the second and fourth fiscal quarters of the fiscal year. Inventory cost, where appropriate, is reduced by estimates of vendor rebates when earned or as the Company progresses towards earning those rebates, provided that they are probable and reasonably estimable.

Property and Equipment

Property and equipment are stated at cost. In general, new building additions are separated into components, each with its own estimated useful life. Depreciation and amortization expense is computed using the straight-line method over estimated useful lives or the lease term, if shorter. Leasehold improvements incurred after the beginning of the initial lease term are depreciated over the shorter of the estimated useful life of the asset or the remaining term of the initial lease plus any renewals that are reasonably assured at the date the leasehold improvement is made.

Estimated useful lives for financial reporting purposes are as follows:

	Years
Buildings and improvements	5 - 50
Equipment and fixtures	3 - 20

Repair and maintenance costs are expensed when incurred. Expenditures for remodels, refurbishments and improvements that add to or change the way an asset functions or that extend the useful life of an asset are capitalized. Assets that were removed during the remodel, refurbishment or improvement are retired. When assets are retired or sold, the asset costs and related accumulated depreciation are eliminated, with any remaining gain or loss recorded.

Impairment of Long-Lived Assets

The Company periodically evaluates long-lived assets for impairment when relocating or closing a warehouse or when events or changes in circumstances occur that may indicate the carrying amount of the asset group, generally an individual warehouse, may not be fully recoverable. For asset groups

52

COSTCO WHOLESALE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except share data) (Continued)

Note 1—Summary of Significant Accounting Policies (Continued)

to be held and used, including warehouses to be relocated, the carrying value of the asset group is considered recoverable when the estimated future undiscounted cash flows generated from the use and eventual disposition of the asset group exceed the group’s net carrying value. In the event that the carrying value is not considered recoverable, an impairment loss would be recognized for the asset group to be held and used equal to the excess of the carrying value above the estimated fair value of the asset group. For asset groups classified as held for sale (disposal group), the carrying value is compared to the disposal group’s fair value less costs to sell. The Company estimates fair value by obtaining market appraisals from third party brokers or other valuation techniques. In 2011, 2010, and 2009, the Company recorded impairment charges of $1, $2, and $11, respectively, included in provision for impaired assets and closing costs, net and interest income and other in the consolidated statements of income. In 2009, the charge was primarily related to the closure of its two Costco Home locations in July 2009.

Assets classified as held for sale were not material as of August 28, 2011 or August 29, 2010.

Other Assets

Other assets consist of the following at the end of 2011 and 2010:

	2011		2010
Prepaid rents, lease costs, and long-term deposits	$	211	$	186
Tax-related assets		179		18
Goodwill, net		74		71
Cash surrender value of life insurance		64		65
Other		95		96
Investment in Mexico		0		357
Other Assets	$	623	$	793

As previously discussed, the Company began consolidating Mexico at the beginning of 2011, on a prospective basis. The amount of retained earnings that represented undistributed earnings of Mexico was $307 at the end of 2010. The Company did not make any capital contributions to its investment in Mexico in 2010 or 2009. The investments and equity in earnings of other unconsolidated joint ventures are not material.

Tax-related assets represent amounts deposited with taxing authorities in connection with ongoing income tax audits and the Company’s long term deferred tax assets.

Goodwill resulting from certain business combinations is reviewed for impairment in the fourth quarter of each fiscal year, or more frequently if circumstances dictate. No impairment of goodwill has been incurred to date.

The Company adjusts the carrying value of its employee life insurance contracts to the net cash surrender value at the end of each reporting period.

53

COSTCO WHOLESALE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except share data) (Continued)

Note 1—Summary of Significant Accounting Policies (Continued)

Accounts Payable

The Company’s banking system provides for the daily replenishment of major bank accounts as checks are presented. Accordingly, included in accounts payable at the end of 2011 and 2010 are $108 and $617, respectively, representing the excess of outstanding checks over cash on deposit at the banks on which the checks were drawn.

Insurance/Self-Insurance Liabilities

The Company uses a combination of insurance and self-insurance mechanisms, including a wholly-owned captive insurance entity and participation in a reinsurance program, to provide for potential liabilities for workers’ compensation, general liability, property damage, directors and officers liability, vehicle liability, and employee health care benefits. The reinsurance agreement is one year in duration and new agreements are entered into by each participant at their discretion at the commencement of the next fiscal year. Liabilities associated with the risks that are retained by the Company are not discounted and are estimated, in part, by considering historical claims experience, demographic factors, severity factors, and other actuarial assumptions. The estimated accruals for these liabilities could be significantly affected if future occurrences and claims differ from these assumptions and historical trends. As of the end of 2011 and 2010, these insurance liabilities were $595 and $541 in the aggregate, respectively, and were included in accounts payable, accrued salaries and benefits, and other current liabilities on the consolidated balance sheets, classified based on their nature.

The Company’s wholly-owned captive insurance subsidiary (the captive) receives direct premiums, which are netted against the Company’s premium costs in selling, general and administrative expenses, in the consolidated statements of income. The captive participates in a reinsurance program that includes other third-party members. The member agreements and practices of the reinsurance program limit any participating members’ individual risk. Income statement adjustments related to the reinsurance program and related impacts to the consolidated balance sheets are recognized as information becomes known. In the event the Company leaves the reinsurance program, the Company is not relieved of its primary obligation to the policyholders for activity prior to the termination of the annual agreement.

Other Current Liabilities

Other current liabilities consist of the following at the end of 2011 and 2010:

	2011		2010
Accrued member rewards	$	602	$	522
Insurance-related liabilities		276		263
Tax-related liabilities		122		79
Cash card liability		112		100
Deferred sales		141		98
Other current liabilities		96		86
Vendor consideration liabilities		66		57
Sales return reserve		74		72
Interest payable		51		51
Other Current Liabilities	$	1,540	$	1,328

54

COSTCO WHOLESALE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except share data) (Continued)

Note 1—Summary of Significant Accounting Policies (Continued)

Derivatives

The Company is exposed to foreign-currency exchange-rate fluctuations in the normal course of business. The Company manages these fluctuations, in part, through the use of forward foreign-exchange contracts, seeking to economically hedge the impact of fluctuations of foreign exchange on known future expenditures denominated in a foreign-currency. The contracts are intended primarily to economically hedge exposure to U.S. dollar merchandise inventory expenditures made by the Company’s international subsidiaries or other entities whose functional currency is other than the U.S. dollar. Currently, these contracts do not qualify for derivative hedge accounting. The Company seeks to mitigate risk with the use of these contracts and does not intend to engage in speculative transactions. These contracts do not contain any credit-risk-related contingent features. The aggregate notional amounts of forward foreign-exchange contracts were $247 and $225 at the end of 2011 and 2010, respectively.

The Company seeks to manage counterparty risk associated with these contracts by limiting transactions to counterparties with which the Company has an established banking relationship. There can be no assurance, however, that this practice effectively mitigates counterparty risk. The contracts are limited to less than one year in duration. See Note 3 for information on the fair value of open, unsettled forward foreign-exchange contracts as of August 28, 2011, and August 29, 2010.

The amount of net foreign-currency transaction gains or losses recognized in interest income and other, net in the accompanying consolidated statements of income relating to forward foreign-exchange contracts were nominal in 2011, 2010 and 2009. These gains and losses are largely offset by the impact of revaluing related foreign currency denominated payables, which are also recognized in interest income and other, net.

The Company is exposed to risks due to fluctuations in prices for the energy it consumes, particularly electricity and natural gas, which it seeks to partially mitigate through the use of fixed-price contracts for approximately 36% of its warehouses and other facilities, primarily in the U.S. and Canada. The Company also enters into variable-priced contracts for some purchases of natural gas, in addition to fuel for its gas stations, on an index basis. These contracts meet the characteristics of derivative instruments, but generally qualify for the “normal purchases or normal sales” exception under authoritative guidance and thus require no mark-to-market adjustment.

Foreign-Currency

The functional currencies of the Company’s international subsidiaries are the local currency of the country in which the subsidiary is located. Assets and liabilities recorded in foreign currencies are translated at the exchange rate on the balance sheet date. Translation adjustments resulting from this process are recorded in accumulated other comprehensive income. Revenues and expenses of the Company’s consolidated foreign operations are translated at average rates of exchange prevailing during the year.

The Company recognizes foreign-currency transaction gains and losses related to revaluing all monetary assets and liabilities denominated in currencies other than the functional currency, generally the U.S. dollar payables of consolidated subsidiaries to their functional currency, in interest income and other, net in the accompanying consolidated statements of income. These gains and losses were $8 and $13 in 2011 and 2010, respectively and not significant in 2009.

55

COSTCO WHOLESALE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except share data) (Continued)

Note 1—Summary of Significant Accounting Policies (Continued)

Revenue Recognition

The Company generally recognizes sales, net of estimated returns, at the time the member takes possession of merchandise or receives services. When the Company collects payments from customers prior to the transfer of ownership of merchandise or the performance of services, the amounts received are generally recorded as deferred sales included in other current liabilities on the consolidated balance sheets until the sale or service is completed. The Company reserves for estimated sales returns based on historical trends in merchandise returns, net of the estimated net realizable value of merchandise inventories to be returned and any estimated disposition costs. Amounts collected from members, which under common trade practices are referred to as sales taxes, are recorded on a net basis.

The Company evaluates whether it is appropriate to record the gross amount of merchandise sales and related costs or the net amount earned as commissions. Generally, when Costco is the primary obligor, is subject to inventory risk, has latitude in establishing prices and selecting suppliers, can influence product or service specifications, or has several but not all of these indicators, revenue is recorded on a gross basis. If the Company is not the primary obligor and does not possess other indicators of gross reporting as noted above, it records the net amounts as commissions earned, which is reflected in net sales.

Membership fee revenue represents annual membership fees paid by substantially all of the Company’s members. The Company accounts for membership fee revenue, net of estimated refunds, on a deferred basis, whereby revenue is recognized ratably over the one-year membership period. As previously disclosed, effective with renewals occurring on and after March 1, 2009, the Company changed an element of its membership renewal policy. Memberships renewed within two months after expiration of the current membership year are extended for twelve months from the expiration date. (Under the previous policy, renewals within six months of the expiration date were extended for twelve months from the expiration date.) Memberships renewed more than two months after such expiration date are extended for twelve months from the renewal date. This change has had an immaterial effect of deferring recognition of certain membership fees paid by late-renewing members.

The Company’s Executive Members qualify for a 2% reward (up to a maximum of approximately five hundred dollars per year on qualified purchases made at Costco), which can be redeemed at Costco warehouses. The Company accounts for this reward as a reduction in sales, with the related accrued member rewards liability included in other current liabilities on the consolidated balance sheets. The sales reduction and corresponding liability are computed after giving effect to the estimated impact of non-redemptions based on historical data. The net reduction in sales was $790, $688, and $610 in 2011, 2010, and 2009, respectively.

Merchandise Costs

Merchandise costs consist of the purchase price of inventory sold, inbound shipping charges and all costs related to the Company’s depot operations, including freight from depots to selling warehouses, and are reduced by vendor consideration. Merchandise costs also include salaries, benefits and depreciation on production equipment in certain fresh foods and ancillary departments.

56

COSTCO WHOLESALE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except share data) (Continued)

Note 1—Summary of Significant Accounting Policies (Continued)

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist primarily of salaries, benefits and workers’ compensation costs for warehouse employees, other than fresh foods departments and certain ancillary businesses, as well as all regional and home office employees, including buying personnel. Selling, general and administrative expenses also include utilities, bank charges, rent and substantially all building and equipment depreciation, as well as other operating costs incurred to support warehouse operations.

Marketing and Promotional Expenses

Costco’s policy is generally to limit marketing and promotional expenses to new warehouse openings, occasional direct mail marketing to prospective new members and direct mail marketing programs to existing members promoting selected merchandise. Marketing and promotional costs are expensed as incurred and are included in selling, general and administrative expenses in the accompanying consolidated statements of income.

Stock-Based Compensation

Compensation expense for all stock-based awards granted is recognized using the straight-line method. The fair value of restricted stock units (RSUs) is calculated as the market value of the common stock on the measurement date less the present value of the expected dividends forgone during the vesting period. The fair value of stock options is measured using the Black-Scholes valuation model. While options and RSUs granted to employees generally vest over five years, all grants allow for either daily or quarterly vesting of the pro-rata number of stock-based awards that would vest on the next anniversary of the grant date in the event of retirement or voluntary termination. The historical experience rate of actual forfeitures has been minimal. As such, the Company does not reduce stock-based compensation for an estimate of forfeitures because the estimate is inconsequential in light of historical experience and considering the awards vest on either a daily or quarterly basis. The impact of actual forfeitures arising in the event of involuntary termination is recognized as actual forfeitures occur, which generally has been infrequent. Stock options have a ten-year term. Stock-based compensation expense is predominately included in selling, general and administrative expenses on the consolidated statements of income. See Note 7 for additional information on the Company’s stock-based compensation plans.

Leases

The Company leases land and/or buildings at warehouses and certain other office and distribution facilities primarily under operating leases. Operating leases expire at various dates through 2051, with the exception of one lease in the Company’s United Kingdom subsidiary, which expires in 2151. These leases generally contain one or more of the following options which the Company can exercise at the end of the initial lease term: (a) renewal of the lease for a defined number of years at the then-fair market rental rate or rate stipulated in the lease agreement; (b) purchase of the property at the then-fair market value; or (c) right of first refusal in the event of a third party purchase offer.

The Company accounts for its lease expense with free rent periods and step-rent provisions on a straight-line basis over the original term of the lease, from the date the Company has control of the

57

COSTCO WHOLESALE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except share data) (Continued)

Note 1—Summary of Significant Accounting Policies (Continued)

property. Certain leases provide for periodic rental increases based on the price indices, and some of the leases provide for rents based on the greater of minimum guaranteed amounts or sales volume.

The Company has entered into four capital leases for warehouse locations, expiring at various dates through 2040. Capital lease assets are included in buildings and improvements in the accompanying consolidated balance sheets. Amortization expense on capital lease assets is recorded as depreciation expense and is predominately included in selling, general and administrative expenses. Capital lease liabilities are recorded at the lesser of the estimated fair market value of the leased property or the net present value of the aggregate future minimum lease payments and are included in other current liabilities and other liabilities. Interest on these obligations is included in interest expense.

Preopening Expenses

Preopening expenses related to new warehouses, new regional offices and other startup operations are expensed as incurred.

Provision for Impaired Assets and Closing Costs, Net

Warehouse closing costs incurred relate principally to expenses associated with the Company’s relocation of certain warehouses (that were not otherwise impaired) to larger and better-located facilities. The provisions for 2011, 2010, and 2009 included charges in the amounts indicated below:

	2011		2010		2009
Warehouse closing expenses	$	8	$	6	$	9
Impairment of long-lived assets		1		2		8
Provision for Impaired Assets and Closing Costs, Net	$	9	$	8	$	17

Warehouse closing expenses primarily relate to accelerated building depreciation based on the shortened useful life through the expected closing date and remaining lease obligations, net of estimated sublease income, for leased locations. At the end of 2011 and 2010, the Company’s reserve for warehouse closing costs was $5 and primarily related to estimated future lease obligations and other estimated contractual obligations associated with exiting the properties.

Interest Income and Other, Net

Interest income and other, net includes:

	2011		2010		2009
Interest income, net	$	41	$	23	$	27
Earnings of affiliates and other, net		19		65		31
Interest Income and Other, Net	$	60	$	88	$	58

As previously discussed, Costco began consolidating Mexico at the beginning of 2011, on a prospective basis. For 2010 and 2009, the equity in earnings of Mexico is included in interest income and other, net in the accompanying consolidated statements of income, and was $41 and $32, respectively.

58

COSTCO WHOLESALE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except share data) (Continued)

Note 1—Summary of Significant Accounting Policies (Continued)

The Company periodically evaluates unrealized losses in its investment securities for other-than-temporary impairment using both qualitative and quantitative criteria. In the event a security is deemed to be other-than-temporarily impaired, the Company recognizes the credit loss component in interest income and other, net in the consolidated statements of income. The Company generally only invests in debt securities.

Income Taxes

The Company accounts for income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credits and loss carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences and carry-forwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established when necessary to reduce deferred tax assets to amounts expected to be realized.

The determination of the Company’s provision for income taxes requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. Significant judgment is required in assessing the timing and amounts of deductible and taxable items and the probability of sustaining uncertain tax positions. The benefits of uncertain tax positions are recorded in the Company’s consolidated financial statements only after determining a more-likely-than-not probability that the uncertain tax positions will withstand challenge, if any, from tax authorities. When facts and circumstances change, the Company reassesses these probabilities and records any changes in the consolidated financial statements as appropriate. See Note 9 for additional information.

Net Income Attributable to Costco per Common Share

The computation of basic net income per share uses the weighted average number of shares that were outstanding during the period. The computation of diluted net income per share uses the weighted average number of shares in the basic net income per share calculation plus the number of common shares that would be issued assuming exercise and vesting of all potentially dilutive common shares outstanding using the treasury stock method for shares subject to stock options and restricted stock units and the “if converted” method for the convertible note securities.

Stock Repurchase Programs

Repurchased shares of common stock are retired, in accordance with the Washington Business Corporation Act. The par value of repurchased shares is deducted from common stock and the excess repurchase price over par value is deducted from additional paid-in capital and retained earnings. See Note 6 for additional information.

Recently Adopted Accounting Pronouncements

As discussed above in Note 1, the Company adopted guidance related to consolidation of variable interest entities.

59

COSTCO WHOLESALE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except share data) (Continued)

Note 1—Summary of Significant Accounting Policies (Continued)

In October 2009, the FASB issued amended guidance on revenue recognition for multiple-deliverable revenue arrangements. Under this guidance, when vendor-specific objective evidence or third-party evidence for deliverables in an arrangement cannot be determined, a best estimate of the selling price is required to separate deliverables and allocate arrangement consideration using the relative selling-price method. This guidance also prescribes disclosure requirements on how the application of the relative selling price method affects the timing and amount of revenue recognition. The Company adopted this guidance at the beginning of its fiscal year 2011. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

In January 2010, the FASB issued guidance to amend the disclosure requirements related to recurring and nonrecurring fair value measurements. The guidance requires disclosure of transfers of assets and liabilities between Level 1 and Level 2 of the fair value measurement hierarchy, including the reasons and the timing of the transfers. Under Level 3 of the fair value measurement hierarchy, the guidance requires disclosure of information on purchases, sales, issuances, and settlements on a gross basis (as opposed to a net basis) in the reconciliation of the assets and liabilities measured. The Company adopted this guidance at the beginning of its third quarter of fiscal 2010, except for the Level 3 reconciliation disclosures on the roll-forward activities, which were adopted at the beginning of its third quarter of fiscal 2011. The adoption of this standard did not have a material impact on the Company’s consolidated financial statement disclosures.

Recent Accounting Pronouncements Not Yet Adopted

In May 2011, the FASB issued guidance to amend the requirements related to fair value measurement which changes the wording used to describe many requirements in GAAP for measuring fair value and for disclosing information about fair value measurements. Additionally, the amendments clarify the FASB’s intent about the application of existing fair value measurement requirements. The amended guidance is effective for interim and annual periods beginning after December 15, 2011, and is applied prospectively. The Company plans to adopt this guidance at the beginning of its third quarter of fiscal year 2012. Adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statement disclosure.

In June 2011, the FASB issued guidance on presentation of comprehensive income. The new guidance eliminates the current option to report other comprehensive income and its components in the statement of changes in equity. Instead, an entity will be required to present either a continuous statement of net income and other comprehensive income or to present the information in two separate but consecutive statements. The new guidance must be applied retrospectively and is effective for interim and annual periods beginning after December 15, 2011. The Company plans to adopt this guidance at the beginning of its third quarter of fiscal 2012. Adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements and will impact the financial statements’ presentation only.

In September 2011, the FASB issued guidance to amend and simplify the rules related to testing goodwill for impairment. The revised guidance allows an entity to make an initial qualitative evaluation, based on the entity’s events and circumstances, to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The results of this qualitative assessment determine whether it is necessary to perform the currently required two-step impairment test. The new

60

COSTCO WHOLESALE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except share data) (Continued)

Note 1—Summary of Significant Accounting Policies (Continued)

guidance is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted. The Company plans to early adopt this guidance for its fiscal year 2012 annual impairment test. Adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

Note 2—Investments

The major categories of the Company’s investments are as follows:

Money market mutual funds

The Company invests in money funds that seek to maintain a net asset value of par, while limiting overall exposure to credit, market, and liquidity risks.

U.S. government and agency securities

These U.S. government-secured debt instruments are publically traded and valued. Losses in this category are primarily due to market liquidity and interest rate reductions.

Corporate notes and bonds

The Company evaluates its corporate debt securities based on a variety of factors including, but not limited to, the credit rating of the issuer. The vast majority of the Company’s corporate debt securities are rated investment grade by the major rating agencies.

FDIC-insured corporate bonds

These bonds are guaranteed by the full faith and credit of the U.S. government under the FDIC’s Temporary Liquidity Guarantee Program. Losses in this category are primarily due to market liquidity and interest rate reductions.

Asset and mortgage-backed securities

The vast majority of the Company’s asset and mortgage-backed securities have investment grade credit ratings from the major rating agencies. These investments are collateralized by residential real estate, credit card receivables, commercial real estate, foreign mortgage receivables, and lease receivables. Estimates of fair value are based upon a variety of factors including, but not limited to, credit rating of the issuer, internal credit risk, interest rate variation, prepayment assumptions, and the potential for default.

Certificates of deposit

Certificate of deposits are short-term interest-bearing debt instruments issued by various financial institutions with which the Company has an established banking relationship.

61

COSTCO WHOLESALE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except share data) (Continued)

Note 2—Investments (Continued)

The Company’s investments at the end of 2011 and 2010, were as follows:

2011:	Cost Basis		Unrealized Gains		Unrealized Losses		Recorded Basis
Available-for-sale:
U.S. government and agency securities	$	1,096	$	8	$	0	$	1,104
Corporate notes and bonds		6		1		0		7
FDIC-insured corporate bonds		208		1		0		209
Asset and mortgage-backed securities		12		0		0		12
Total available-for-sale		1,322		10		0		1,332
Held-to-maturity:
Certificates of deposit		272						272
Total investments	$	1,594	$	10	$	0	$	1,604

2010:	Cost Basis		Unrealized Gains		Unrealized Losses		Recorded Basis
Available-for-sale:
U.S. government and agency securities	$	1,222	$	7	$	0	$	1,229
Corporate notes and bonds		10		1		0		11
FDIC-insured corporate bonds		139		0		0		139
Asset and mortgage-backed securities		23		0		0		23
Total available-for-sale		1,394		8		0		1,402
Held-to-maturity:
Certificates of deposit		133						133
Total investments	$	1,527	$	8	$	0	$	1,535

Gross unrealized gains and losses on cash equivalents were not material at August 28, 2011 and August 29, 2010.

The proceeds and gross realized gains and losses from sales of available-for-sale securities during 2011, 2010, and 2009 are provided in the following table:

	2011		2010		2009
Proceeds	$	602	$	309	$	183
Realized gains		1		5		5
Realized losses		0		1		2

During 2009, the Company recognized $12 other-than-temporary impairment losses related to certain enhanced money fund investment securities, which were included in interest income and other, net in the accompanying consolidated statements of income. At the end of 2010, the Company no longer held any of these securities. At the end of 2011 and 2010 the Company’s available-for-sale securities that were in continuous unrealized-loss position were insignificant.

62

COSTCO WHOLESALE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except share data) (Continued)

Note 2—Investments (Continued)

The maturities of available-for-sale and held-to-maturity securities at August 28, 2011 were as follows:

	Available-For-Sale				Held-To-Maturity
	Cost Basis		Fair Value		Cost Basis		Fair Value
Due in one year or less	$	890	$	892	$	272	$	272
Due after one year through five years		426		433		0		0
Due after five years		6		7		0		0
	$	1,322	$	1,332	$	272	$	272

Note 3—Fair Value Measurement

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The tables below present information at the end 2011 and 2010, regarding the Company’s financial assets and financial liabilities that are measured at fair value on a recurring basis, and indicate the level within the fair value hierarchy of the valuation techniques utilized to determine such fair value. As of these dates, the Company’s holdings of Level 3 financial assets and liabilities were immaterial.

2011:	Level 1		Level 2
Money market mutual funds(1)	$	200	$	0
Investment in U.S. government and agency securities(3)		0		1,177
Investment in corporate notes and bonds		0		7
Investment in FDIC-insured corporate bonds		0		209
Investment in asset and mortgage-backed securities		0		12
Forward foreign-exchange contracts, in asset position(2)		0		1
Forward foreign-exchange contracts, in (liability) position(2)		0		(2	)
Total	$	200	$	1,404

2010:	Level 1		Level 2
Money market mutual funds(1)	$	1,514	$	0
Investment in U.S. government and agency securities		0		1,229
Investment in corporate notes and bonds		0		11
Investment in FDIC-insured corporate bonds		0		139
Investment in asset and mortgage-backed securities		0		23
Forward foreign-exchange contracts, in asset position(2)		0		1
Forward foreign-exchange contracts, in (liability) position(2)		0		(3	)
Total	$	1,514	$	1,400

⁽¹⁾  Included in cash and cash equivalents in the accompanying consolidated balance sheets.

⁽²⁾  The asset and the liability values are included in deferred income taxes and other current assets and other current liabilities, respectively, in the accompanying consolidated balance sheets. See Note 1 for additional information on derivative instruments.

⁽³⁾  $73 and $1,104 included in cash and cash equivalents and short-term investments, respectively, in the accompanying consolidated balance sheets.

63

COSTCO WHOLESALE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except share data) (Continued)

Note 3—Fair Value Measurement (Continued)

Changes in fair value, including net transfers, of all financial assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during 2011 and 2010 were immaterial.

The Company reports transfers in and out of Levels 1, 2, and 3, as applicable, using the fair value of the individual securities as of the beginning of the reporting period in which the transfer occurred. There were no transfers in or out of Level 1, 2, or 3 during 2011 and 2010.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Financial assets measured at fair value on a nonrecurring basis include held-to-maturity investments that are carried at amortized cost and are not remeasured to fair value on a recurring basis. There were no fair value adjustments to these financial assets measured during the 2011 and 2010.

Nonfinancial assets measured at fair value on a nonrecurring basis include items such as long lived assets that are measured at fair value resulting from an impairment, if deemed necessary. Fair value adjustments to these nonfinancial assets and liabilities during 2011 and 2010 were immaterial.

Note 4—Debt

Bank Credit Facilities and Commercial Paper Programs

The Company enters into various short-term bank credit facilities. At the end of 2011 and 2010, the total amount of credit under these facilities was $391 and $341, respectively. The total amount outstanding was $26 at the end of 2010. There was nothing outstanding at the end of 2011. The various credit facilities provide for applicable interest rates ranging from 0.58% to 4.39% in 2011 and 0.61% to 3.63% in 2010.

Short-Term Borrowings

The weighted average borrowings, maximum borrowings, and weighted average interest rate under all short-term borrowing arrangements were as follows for 2011 and 2010:

Category of Aggregate Short-term Borrowings	Maximum Amount Outstanding During the Fiscal Year		Average Amount Outstanding During the Fiscal Year		Weighted Average Interest Rate During the Fiscal Year
Year ended August 28, 2011
Bank borrowings:
Canada	$	6	$	4		3.00	%
Japan		70		20		0.58
Bank overdraft facility:
United Kingdom		16		4		1.50
Year ended August 29, 2010
Bank borrowings:
Canada	$	1	$	1		2.75	%
Japan		64		39		0.63
Bank overdraft facility:
United Kingdom		5		2		1.50

64

COSTCO WHOLESALE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except share data) (Continued)

Note 4—Debt (Continued)

Long-Term Debt

Long-term debt at the end of 2011 and 2010 consisted of the following:

	2011		2010
5.5% Senior Notes due March 2017	$	1,097	$	1,096
5.3% Senior Notes due March 2012		900		899
2.695% Promissory notes due October 2017		85		77
0.35% over Yen TIBOR (6-month) Term Loan due June 2018		39		35
3.5% Zero Coupon convertible subordinated notes due August 2017		31		32
Other long-term debt		1		2
Total long-term debt		2,153		2,141
Less current portion of 5.3% Senior Notes due March 2012		900		0
Long-term debt, excluding current portion	$	1,253	$	2,141

In April 2010, the Company’s Japanese subsidiary paid the outstanding principal and interest balances related to the 0.92% promissory notes due April 2010, originally issued in April 2003.

In June 2008, the Company’s Japanese subsidiary entered into a ten-year term loan with a variable rate of interest of Yen TIBOR (6-month) plus a 0.35% margin (0.79% and 0.84% at the end of 2011 and 2010, respectively) on the outstanding balance. Interest is payable semi-annually in December and June and principal is due in June 2018.

In October 2007, the Company’s Japanese subsidiary issued promissory notes through a private placement, bearing interest at 2.695%. Interest is payable semi-annually, and principal is due in October 2017. The Company guarantees all financing instruments issued by its Japanese subsidiary.

In February 2007, the Company issued $900 of 5.3% Senior Notes due March 15, 2012 (2012 Notes) at a discount of $2 and $1,100 of 5.5% Senior Notes due March 15, 2017 (2017 Notes) at a discount of $6 (together the 2007 Senior Notes). Interest on the 2007 Senior Notes is payable semi-annually on March 15 and September 15 of each year. The discount and issuance costs associated with the Senior Notes are being amortized to interest expense over the terms of those notes. The Company, at its option, may redeem the 2007 Senior Notes at any time, in whole or in part, at a redemption price plus accrued interest. The redemption price is equal to the greater of 100% of the principal amount of the 2007 Senior Notes to be redeemed, or the sum of the present values of the remaining scheduled payments of principal and interest to maturity. Additionally, the Company will be required to make an offer to purchase the 2007 Senior Notes at a price of 101% of the principal amount plus accrued and unpaid interest to the date of repurchase, upon certain events as defined by the terms of the 2007 Senior Notes. In March 2011, the Company reclassified its 2012 Notes, to a current liability within the current portion of long-term debt of the consolidated balance sheets to reflect its remaining maturity of less than one year.

In August 1997, the Company sold $900 principal amount at maturity 3.5% Zero Coupon Convertible Subordinated Notes (Zero Coupon Notes) due in August 2017. The Zero Coupon Notes were priced with a yield to maturity of 3.5%, resulting in gross proceeds to the Company of $450. The remaining Zero Coupon Notes outstanding are convertible into a maximum of 878,000 shares of Costco Common

65

COSTCO WHOLESALE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except share data) (Continued)

Note 4—Debt (Continued)

Stock shares at an initial conversion price of $22.71. Holders of the Zero Coupon Notes may require the Company to purchase the Zero Coupon Notes (at the discounted issue price plus accrued interest to date of purchase) in August 2012. The Company, at its option, may redeem the Zero Coupon Notes (at the discounted issue price plus accrued interest to date of redemption) any time after August 2002. As of August 28, 2011, $862 in principal amount of Zero Coupon Notes had been converted by note holders into shares of Costco Common Stock, of which the principal converted during 2011, 2010 and 2009 is detailed in the table below:

	2011		2010		2009
Principal converted during period	$	3	$	1	$	25
Principal converted, including the related debt discount	$	2	$	1	$	19
Shares issued upon conversion (000’s)		65		18		562

The carrying value and estimated fair value of long-term debt consisted of the following at the end of 2011 and 2010:

	2011				2010
	Carrying Value		Fair Value		Carrying Value		Fair Value
2017 Notes	$	1,097	$	1,314	$	1,096	$	1,295
2012 Notes		900		924		899		961
Zero Coupon Notes		31		63		32		51
Other long-term debt		125		134		114		122
Total long-term debt		2,153		2,435		2,141		2,429
Less current portion		900		924		0		0
Long-term debt, excluding current portion	$	1,253	$	1,511	$	2,141	$	2,429

The estimated fair value of the zero coupon notes is based upon quoted market prices. All of the Company’s other debt obligations are based upon quoted market prices of similar types of borrowing arrangements.

Maturities of long-term debt during the next five fiscal years and thereafter are as follows:

2012	$	900
2013		0
2014		0
2015		0
2016		0
Thereafter		1,253
Total	$	2,153

66

COSTCO WHOLESALE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except share data) (Continued)

Note 5—Leases

Operating Leases

The aggregate rental expense and sublease income related to certain of its operating lease arrangements, for 2011, 2010 and 2009 are as follows:

	Aggregate rental expense		Sublease income(1)
2011	$	208	$	10
2010		187		10
2009		177		10

⁽¹⁾  Included in interest income and other, net

Contingent rents are not material.

Capital Leases

Gross assets recorded under these leases were $170 and $169, at the end of 2011 and 2010, respectively. These assets are recorded net of accumulated amortization of $13 and $7 at the end of 2011 and 2010, respectively.

Future minimum payments, net of sub-lease income of $183 for all years combined, during the next five fiscal years and thereafter under non-cancelable operating leases with terms of at least one year and capital leases, at the end of 2011, were as follows:

	Operating leases		Capital lease obligations
2012	$	183	$	13
2013		182		13
2014		175		13
2015		162		13
2016		155		13
Thereafter		1,850		311
Total	$	2,707		376
Less amount representing interest				(207	)
Net present value of minimum lease payment				169
Less current installments(1)				(3	)
Long-term capital lease obligations less current installments(2)			$	166

⁽¹⁾  Included in other current liabilities.

⁽²⁾  Included in deferred income taxes and other liabilities.

Certain leases may require the Company to incur costs to return leased property to its original condition, such as the removal of gas tanks. Estimated asset retirement obligations associated with these leases, which amounted to $31 and $26 at the end of 2011 and 2010, respectively, are recorded and included in deferred income taxes and other liabilities on the consolidated balance sheets.

67

COSTCO WHOLESALE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except share data) (Continued)

Note 6—Stockholders’ Equity

Dividends

The Company’s current quarterly dividend rate is $0.24 per share.

Stock Repurchase Programs

The Company’s stock repurchase activity during 2011, 2010, and 2009 is summarized in the following table:

	Shares Repurchased (000’s)		Average Price per Share		Total Cost
2011		8,939	$	71.74	$	641
2010		9,943		57.14		568
2009		895		63.84		57

These amounts differ from the stock repurchase balances in the consolidated statements of cash flows to the extent that repurchases had not settled at the end of the fiscal year. Purchases are made from time-to-time, as conditions warrant, in the open market or in block purchases, and pursuant to share repurchase plans under SEC Rule 10b5-1. Repurchased shares are retired.

Amounts remaining under stock repurchase authorizations of the Board of Directors at the end of 2011 are detailed below:

Date Authorized	Amount Authorized		Amount Repurchased		Amount Remaining
Prior to November 2007	$	4,800	$	4,800	$	0
November 2007 (expired in November 2010)(1)		1,000		705		0
July 2008 (expired in July 2011)(2)		1,000		208		0
April 2011 (expires April 2015)		4,000		294		3,706
Total	$	10,800	$	6,007	$	3,706

⁽¹⁾  In November 2010, $295 of the November 2007 authorization expired having been unused by the Company.

⁽²⁾  In April 2011, $792 of the July 2008 authorization was cancelled and replaced by the Board of Directors upon authorization of the April 2011 stock repurchase program.

Accumulated Other Comprehensive Income

The components of accumulated other comprehensive income, net of tax where applicable, were as follows:

	2011		2010
Unrealized gains on short-term investments	$	7	$	6
Foreign-currency translation adjustment and other		366		116
Accumulated other comprehensive income	$	373	$	122

68

COSTCO WHOLESALE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except share data) (Continued)

Note 7—Stock-Based Compensation Plans

Through the first quarter of fiscal 2006, the Company granted stock options under the Amended and Restated 2002 Stock Incentive Plan (Second Restated 2002 Plan) and predecessor plans. Since the fourth quarter of fiscal 2006, the Company has granted RSUs under the Second Restated 2002 Plan. In July 2008 the Third Restated 2002 Plan was amended by the Board of Directors (Fourth Restated 2002 Plan). Under the Fourth Restated 2002 Plan, prospective grants of RSUs are subject, upon certain terminations of employment, to quarterly, as opposed to daily vesting. Previously awarded RSU grants continue to involve daily vesting upon certain terminations of employment. Additionally, employees who attain certain years of service with the Company will receive shares under accelerated vesting provisions on the annual vesting date rather than upon qualified retirement. The first grant impacted by these amendments occurred in the first quarter of fiscal 2009. In the second quarter of fiscal 2010, the Fourth Restated 2002 Plan was amended following shareholder approval and is now referred to as the Fifth Restated 2002 Stock Incentive Plan (Fifth Restated 2002 Plan). The Fifth Restated 2002 Plan authorizes the issuance of an additional 18,000,000 shares (10,285,714 RSUs) of common stock for future grants in addition to grants currently authorized. Each share issued in respect of stock bonuses or stock units is counted as 1.75 shares toward the limit of shares available. The Company issues new shares of common stock upon exercise of stock options and vesting of RSUs.

Summary of Stock Option Activity

The following table summarizes stock option transactions during 2011:

	Number Of Options (in 000’s)			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value(1)
Outstanding at the end of 2010		13,162		$	39.50
Exercised		(7,245	)		39.03
Outstanding and exercisable at the end of 2011		5,917		$	40.07		2.77	$	220

⁽¹⁾  The difference between the exercise price and market value of common stock at August 28, 2011.

The following is a summary of stock options outstanding at the end of 2011:

	Options Outstanding and Exercisable
Range of Prices	Number of Options (in 000’s)		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price
$30.41–$37.35		2,446		2.19	$	35.38
$37.44–$42.41		481		0.67		39.05
$43.79–$43.79		2,649		3.59		43.79
$45.99–$46.46		341		3.58		46.19
		5,917		2.77	$	40.07

69

COSTCO WHOLESALE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except share data) (Continued)

Note 7—Stock-Based Compensation Plans (Continued)

Options exercisable and the weighted average exercise price at the end of 2010 and 2009:

	2010		2009
Options exercisable (shares in 000’s)		13,032		16,588
Weighted average exercise price	$	39.43	$	39.62

The tax benefits realized and intrinsic value related to total stock options exercised during 2011, 2010, and 2009 are provided in the following table:

	2011		2010		2009
Actual tax benefit realized for stock options exercised	$	78	$	34	$	10
Intrinsic value of stock options exercised(1)	$	227	$	98	$	27

⁽¹⁾  The difference between the exercise price and market value of common stock measured at each individual exercise date.

Employee Tax Consequences on Certain Stock Options

In 2010, the Company recorded a non-recurring benefit of $24 to selling, general and administrative expense related to a refund of a previously recorded Canadian employee tax liability.

Summary of Restricted Stock Unit Activity

RSUs granted to employees and to non-employee directors generally vest over five years and three years, respectively; however, the Company provides for accelerated vesting for employees that have attained twenty-five or more years of service with the Company. Recipients are not entitled to vote or receive dividends on unvested shares. At the end of 2011, 8,565,000 shares were available to be granted as RSUs to eligible employees and directors under the Fifth Restated 2002 Plan.

The following awards were outstanding at the end of 2011:

• 9,010,000 shares of time-based RSUs that vest upon continued employment over specified periods of time; and

• 717,000 performance-based RSUs, of which 315,000 will be formally granted to certain executive officers of the Company upon the official certification of the attainment of specified performance targets for 2011. Once formally granted, the restrictions lapse upon continued employment over specified periods of time.

The following table summarizes RSU transactions during 2011:

	Number of Units (in 000’s)			Weighted-Average Grant Date Fair Value
Non-vested at the end of 2010		9,253		$	55.22
Granted		3,971			61.27
Vested		(3,322	)		55.55
Forfeited		(175	)		55.90
Non-vested at the end of 2011		9,727		$	57.56

70

COSTCO WHOLESALE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except share data) (Continued)

Note 7—Stock-Based Compensation Plans (Continued)

Summary of Stock-Based Compensation

The following table summarizes stock-based compensation expense and the related tax benefits under the Company’s plans:

	2011		2010		2009
Restricted stock units	$	206	$	171	$	132
Stock options		1		19		49
Total stock-based compensation expense before income taxes		207		190		181
Less recognized income tax benefit		67		63		60
Total stock-based compensation expense, net of income taxes	$	140	$	127	$	121

The remaining unrecognized compensation cost related to non-vested RSUs at August 28, 2011 was $386 and the weighted-average period of time over which this cost will be recognized is 1.6 years.

Note 8—Retirement Plans

The Company has a 401(k) Retirement Plan that is available to all U.S. employees who have completed 90 days of employment. For all U.S. employees, with the exception of California union employees, the plan allows pre-tax deferrals against which the Company matches 50% of the first one thousand dollars of employee contributions. In addition, the Company provides each eligible participant an annual discretionary contribution based on salary and years of service.

California union employees participate in a defined benefit plan sponsored by their union. The Company makes contributions based upon its union agreement. For all the California union employees, the Company-sponsored 401(k) plan currently allows pre-tax deferrals against which the Company matches 50% of the first five hundred dollars of employee contributions. In addition, the Company will provide each eligible participant a contribution based on hours worked and years of service.

The Company has a defined contribution plan for Canadian and United Kingdom employees and contributes a percentage of each employee’s salary. Certain other foreign operations have defined benefit and defined contribution plans that are not material. Amounts expensed under all plans were $345, $313, and $287 for 2011, 2010, and 2009, respectively, and were included in selling, general and administrative expenses and merchandise costs on the consolidated statements of income.

Note 9—Income Taxes

Income before income taxes is comprised of the following:

	2011		2010		2009
Domestic (including Puerto Rico)	$	1,526	$	1,426	$	1,426
Foreign		857		628		301
Total	$	2,383	$	2,054	$	1,727

71

COSTCO WHOLESALE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except share data) (Continued)

Note 9—Income Taxes (Continued)

The provisions for income taxes for 2011, 2010, and 2009 are as follows:

	2011			2010		2009
Federal:
Current	$	409		$	445	$	396
Deferred		74			1		67
Total federal		483			446		463
State:
Current		78			79		66
Deferred		14			5		12
Total state		92			84		78
Foreign:
Current		270			200		94
Deferred		(4	)		1		(7	)
Total foreign		266			201		87
Total provision for income taxes	$	841		$	731	$	628

Tax benefits associated with the exercise of employee stock options and other employee stock programs were allocated directly to equity attributable to Costco in the amount of $59, $15, and $2, in 2011, 2010, and 2009, respectively.

The reconciliation between the statutory tax rate and the effective rate for 2011, 2010, and 2009 is as follows:

	2011					2010					2009
Federal taxes at statutory rate	$	834		35.0	%	$	718		35.0	%	$	604		35.0	%
State taxes, net		55		2.4			56		2.7			48		2.8
Foreign taxes, net		(66	)	(2.8	)		(38	)	(1.9	)		(24	)	(1.4	)
Other		18		0.7			(5	)	(0.2	)		0		0
Total	$	841		35.3	%	$	731		35.6	%	$	628		36.4	%

The components of the deferred tax assets and liabilities are as follows:

	2011		2010
Equity compensation	$	89	$	112
Deferred income/membership fees		134		118
Accrued liabilities and reserves		429		392
Other		32		35
Total deferred tax assets		684		657
Property and equipment		494		414
Merchandise inventories		164		170
Total deferred tax liabilities		658		584
Net deferred tax assets	$	26	$	73

72

COSTCO WHOLESALE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except share data) (Continued)

Note 9—Income Taxes (Continued)

The deferred tax accounts at the end of 2011 and 2010 include current deferred income tax assets of $360 and $307, respectively, included in deferred income taxes and other current assets; non-current deferred income tax assets of $53 and $10, respectively, included in other assets; and non-current deferred income tax liabilities of $387 and $244, respectively, included in deferred income taxes and other liabilities.

The Company has not provided for U.S. deferred taxes on cumulative undistributed earnings of certain non-U.S. consolidated subsidiaries, aggregating to $2,646 and $1,972 at the end of 2011 and 2010, respectively, as such earnings are deemed by the Company to be indefinitely reinvested. Because of the availability of U.S. foreign tax credits and complexity of the computation, it is not practicable to determine the U.S. federal income tax liability or benefit that would be associated with such earnings if such earnings were not deemed to be indefinitely reinvested.

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits for 2011 and 2010 is as follows:

	2011			2010
Gross unrecognized tax benefit at beginning of year	$	83		$	80
Gross increases—current year tax positions		21			29
Gross increases—tax positions in prior years		10			4
Gross decreases—tax positions in prior years		(6	)		(1	)
Settlements		(1	)		(27	)
Lapse of statute of limitations		(1	)		(2	)
Gross unrecognized tax benefit at end of year	$	106		$	83

Included in the balance at the end of 2011, are $64 of tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. Because of the impact of deferred tax accounting, other than interest and penalties, the disallowance of these tax positions would not affect the annual effective tax rate but would accelerate the payment of cash to the taxing authority to an earlier period.

The total amount of unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in future periods is $34 and $27 at the end of 2011 and 2010, respectively.

Accrued interest and penalties related to income tax matters are classified as a component of income tax expense. The Company recognized $2 of expense and $7 of income related to interest and penalties in 2011 and 2010, respectively. Accrued interest and penalties are $12 and $9 at the end of 2011 and 2010, respectively.

The Company is currently under audit by several taxing jurisdictions in the United States and in several foreign countries. Some audits may conclude in the next 12 months and the unrecognized tax benefits we have recorded in relation to the audits may differ from actual settlement amounts. It is not possible to estimate the effect, if any, of any amount of such change during the next 12 months to previously recorded uncertain tax positions in connection with the audits. The Company does not anticipate that there will be a material increase or decrease in the total amount of unrecognized tax benefits in the next 12 months.

73

COSTCO WHOLESALE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except share data) (Continued)

Note 9—Income Taxes (Continued)

The Company files income tax returns in the United States, various state and local jurisdictions, in Canada and in several other foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state or local examination for years before fiscal 2007. The Company is currently subject to examination in Canada for fiscal years 2006 to present and in California for fiscal years 2004 to present. No other examinations are believed to be material.

Note 10—Net Income Per Common and Common Equivalent Share

The following table shows the amounts used in computing net income per share and the effect on income and the weighted average number of shares of dilutive potential common stock (shares in 000’s):

	2011		2010		2009
Net income available to common stockholders used in basic net income per common share	$	1,462	$	1,303	$	1,086
Interest on convertible notes, net of tax		1		1		1
Net income available to common stockholders after assumed conversions of dilutive securities	$	1,463	$	1,304	$	1,087
Weighted average number of common shares used in basic net income per common share		436,119		438,611		433,988
Stock options and RSUs		6,063		6,409		5,072
Conversion of convertible notes		912		950		1,394
Weighted number of common shares and dilutive potential of common stock used in diluted net income per share		443,094		445,970		440,454
Anti-dilutive stock options and RSUs		0		1,141		8,045

Note 11—Commitments and Contingencies

Legal Proceedings

The Company is involved from time to time in claims, proceedings and litigation arising from its business and property ownership. The Company is a defendant in the following matters, among others:

A class action was filed on May 15, 2009, on behalf of present and former hourly employees in California, in which the plaintiff principally alleges that the Company’s routine closing procedures and security checks cause employees to incur delays that qualify as uncompensated working time. Mary Pytelewski v. Costco Wholesale Corp., Superior Court for the County of San Diego, Case No. 37-2009-00089654. The case was removed to the United States District Court, Southern District of California (San Diego), Case No. 09-CV-02473-AJB (BGS). On December 14, 2010, the court certified two classes of hourly non-exempt employees subject to the Company’s closing lockdown procedures: one under California law for California non-union employees who were subject to the closing procedures between May 15, 2005, and October 1, 2009; and a nationwide class under federal law for full-time employees who were subject to the closing procedures between March 1, 2008, and October 1, 2009. The case has been renamed Eric Stiller v. Costco Wholesale Corp. and the parties are conducting discovery. A similar class action was filed on November 20, 2009, in the State of Washington.

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COSTCO WHOLESALE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except share data) (Continued)

Note 11—Commitments and Contingencies (Continued)

Raven Hawk v. Costco Wholesale Corp., King County Superior Court, Case No. 09-242196-0-SEA. On December 3, 2010, the court granted in part plaintiff’s motion for class certification; the class certified consists of people employed in Washington state warehouses from November 2006 through November 2009 who had clocked out and were detained during closing procedures without compensation. Trial has been scheduled for February 13, 2012.

On July 14, 2010, a putative class action was filed alleging that the Company unlawfully failed to pay overtime compensation, denied meal and rest breaks, failed to pay minimum wages, failed to provide accurate wage-itemization statements, and willfully failed to pay termination wages allegedly resulting from misclassification of certain California department managers as exempt employees. On September 3, 2010, the Company removed the case to federal court. The court remanded the action, and the Company’s petition to the Ninth Circuit for permission to appeal the remand order was denied. On June 24, 2011, defendants filed a motion to strike the class and certain other allegations from the complaint. On July 26, 2011, the court granted the motion in part, without leave to amend, striking allegations predating December 31, 2008, which are covered by a prior class settlement. The Court also granted the motion with respect to allegations post-dating December 31, 2008, but granted plaintiff leave to amend. On August 25, 2011, plaintiff filed an amended complaint, and on September 20, 2011, defendants renewed the motion to strike. The motion is set for hearing on October 13, 2011. Manuel Medrano v. Costco Wholesale Corp., and Costco Wholesale Membership, Inc., Superior Court of California (Los Angeles), Case No. BC441597.

In Velazquez v. Costco, filed April 4, 2011, now pending in U.S. District Court for the Central District of California, Case No. CV11-00508 JVS (RNBx), three former California Receiving Managers seek class treatment for their claim that Costco misclassified California Receiving Managers as exempt. On October 11, 2011, the court denied plaintiffs’ motion for class certification.

On May 12, 2011, a putative class action was filed on behalf of California employees alleging that the Company failed to provide its cashiers with seats, in violation of California law. The complaint also alluded to purported overtime violations and missed meal periods and rest breaks. On August 10, 2011, the Company removed the case to federal court. On August, 17, 2011, the Company filed a motion to dismiss the class action complaint. On August 30, 2011, the plaintiff voluntarily dismissed the case, and a dismissal without prejudice was entered. Suzanne Justice v. Costco Wholesale Corp., United States District Court (Los Angeles), Case No. LACV11-6563-ODW (JEMx).

Claims in the above actions (other than Hawk) are made under various provisions of the California Labor Code and the California Business and Professions Code. Plaintiffs seek restitution/disgorgement, compensatory damages, various statutory penalties, punitive damages, interest, and attorneys’ fees.

A case brought as a class action on behalf of certain present and former female managers, in which plaintiffs allege denial of promotion based on gender in violation of Title VII of the Civil Rights Act of 1964 and California state law. Shirley “Rae” Ellis v. Costco Wholesale Corp., United States District Court (San Francisco), Case No. C-04-3341-MHP. Plaintiffs seek compensatory damages, punitive damages, injunctive relief, interest and attorneys’ fees. Class certification was granted by the district court on January 11, 2007. On September 16, 2011, the United States Court of Appeals for the Ninth Circuit reversed the order of class certification and remanded to the district court for further proceedings.

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COSTCO WHOLESALE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except share data) (Continued)

Note 11—Commitments and Contingencies (Continued)

Class actions stated to have been brought on behalf of certain present and former Costco members:

Numerous putative class actions have been brought around the United States against motor fuel retailers, including the Company, alleging that they have been overcharging consumers by selling gasoline or diesel that is warmer than 60 degrees without adjusting the volume sold to compensate for heat-related expansion or disclosing the effect of such expansion on the energy equivalent received by the consumer. The Company is named in the following actions: Raphael Sagalyn, et al., v. Chevron USA, Inc., et al., Case No. 07-430 (D. Md.); Phyllis Lerner, et al., v. Costco Wholesale Corporation, et al., Case No. 07-1216 (C.D. Cal.); Linda A. Williams, et al., v. BP Corporation North America, Inc., et al., Case No. 07-179 (M.D. Ala.); James Graham, et al. v. Chevron USA, Inc., et al., Civil Action No. 07-193 (E.D. Va.); Betty A. Delgado, et al., v. Allsups, Convenience Stores, Inc., et al., Case No. 07-202 (D.N.M.); Gary Kohut, et al. v. Chevron USA, Inc., et al., Case No. 07-285 (D. Nev.); Mark Rushing, et al., v. Alon USA, Inc., et al., Case No. 06-7621 (N.D. Cal.); James Vanderbilt, et al., v. BP Corporation North America, Inc., et al., Case No. 06-1052 (W.D. Mo.); Zachary Wilson, et al., v. Ampride, Inc., et al., Case No. 06-2582 (D. Kan.); Diane Foster, et al., v. BP North America Petroleum, Inc., et al., Case No. 07-02059 (W.D. Tenn.); Mara Redstone, et al., v. Chevron USA, Inc., et al., Case No. 07-20751 (S.D. Fla.); Fred Aguirre, et al. v. BP West Coast Products LLC, et al., Case No. 07-1534 (N.D. Cal.); J.C. Wash, et al., v. Chevron USA, Inc., et al.; Case No. 4:07cv37 (E.D. Mo.); Jonathan Charles Conlin, et al., v. Chevron USA, Inc., et al.; Case No. 07 0317 (M.D. Tenn.); William Barker, et al. v. Chevron USA, Inc., et al.; Case No. 07-cv-00293 (D.N.M.); Melissa J. Couch, et al. v. BP Products North America, Inc., et al., Case No. 07cv291 (E.D. Tex.); S. Garrett Cook, Jr., et al., v. Hess Corporation, et al., Case No. 07cv750 (M.D. Ala.); Jeff Jenkins, et al. v. Amoco Oil Company, et al., Case No. 07-cv-00661 (D. Utah); and Mark Wyatt, et al., v. B. P. America Corp., et al., Case No. 07-1754 (S.D. Cal.). On June 18, 2007, the Judicial Panel on Multidistrict Litigation assigned the action, entitled In re Motor Fuel Temperature Sales Practices Litigation, MDL Docket No 1840, to Judge Kathryn Vratil in the United States District Court for the District of Kansas. On February 21, 2008, the court denied a motion to dismiss the consolidated amended complaint. On April 12, 2009, the Company agreed to a settlement involving the actions in which it is named as a defendant. Under the settlement, which is subject to final approval by the court, the Company agreed, to the extent allowed by law, to install over five years from the effective date of the settlement temperature-correcting dispensers in the States of Alabama, Arizona, California, Florida, Georgia, Kentucky, Nevada, New Mexico, North Carolina, South Carolina, Tennessee, Texas, Utah, and Virginia. Other than payments to class representatives, the settlement does not provide for cash payments to class members. On August 18, 2009, the court preliminarily approved the settlement. On August 13, 2010, the court denied plaintiffs’ motion for final approval of the settlement. On February 3, 2011, a revised settlement agreement was submitted for court approval. On September 22, 2011, the court preliminarily approved the revised settlement.

The Company has been named as a defendant in two purported class actions relating to sales of organic milk. Hesse v. Costco Wholesale Corp., No. C07-1975 (W.D. Wash.); Snell v. Aurora Dairy Corp., et al., No. 07-CV-2449 (D. Col.). Both actions claim violations of the laws of various states, essentially alleging that milk provided to Costco by its supplier Aurora Dairy Corp. was improperly labeled “organic.” Plaintiffs filed a consolidated complaint on July 18, 2008. With respect to the Company, plaintiffs seek to certify four classes of people who purchased Costco organic milk. Aurora has maintained that it has held and continues to hold valid organic certifications. The consolidated complaint seeks, among other things, actual, compensatory, statutory, punitive and/or exemplary damages in unspecified amounts, as well as costs and attorneys’ fees. On June 3, 2009, the district court

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COSTCO WHOLESALE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except share data) (Continued)

Note 11—Commitments and Contingencies (Continued)

entered an order dismissing with prejudice, among others, all claims against the Company. As a result of an appeal by the plaintiffs, on September 15, 2010, the court of appeals affirmed in part and reversed in part the rulings of the district court and remanded the matter for further proceedings. Plaintiffs have filed amended complaints.

In Verzani, et ano., v. Costco Wholesale Corp., No. 09 CV 2117 (United States District Court for the Southern District of New York), a purported nationwide class action, the plaintiffs allege claims for breach of contract and violation of the Washington Consumer Protection Act, based on the failure of the Company to disclose on the label of its “Shrimp Tray with Cocktail Sauce” the weight of the shrimp in the item as distinct from the accompanying cocktail sauce, lettuce, and lemon wedges. The complaint seeks various forms of damages (including compensatory and treble damages and disgorgement and restitution), injunctive and declaratory relief, attorneys’ fees, costs, and prejudgment interest. On April 21, 2009, the plaintiff filed a motion for a preliminary injunction, seeking to prevent the Company from selling the shrimp tray unless the Company separately discloses the weight of the shrimp and provides shrimp consistent with the disclosed weight. By orders dated July 29 and August 6, 2009, the court denied the preliminary injunction motion and dismissed the claim for breach of contract, and on July 21, 2010, the court of appeals summarily affirmed these rulings. On September 28, 2010, the district court denied the motion of one plaintiff to file an amended complaint. On September 20, 2011, the court of appeals affirmed the rulings of the district court.

In Kilano, et. ano, v. Costco Wholesale Corp., No. 2:10-cv-11456-VAR-DAS (United States District Court for the Eastern District of Michigan), filed on April 12, 2010, a purported class action was filed on behalf of certain Michigan Executive level-members who received 2% rewards. Plaintiffs allege that the Company “guarantees” that the member will receive rewards of no less than the fifty dollar difference between Executive and Gold Star membership and that the Company is required to but has failed to automatically reimburse members whose rewards are less than this difference. Plaintiffs allege violations of the Michigan Consumer Protection Act, breach of contract, and unjust enrichment. They seek compensatory and statutory damages, injunctive relief, costs, and attorneys’ fees. The Company filed an answer denying the material allegations of the complaint. On April 5, 2011, the court denied plaintiff’s motion for class certification. On July 22, 2011, plaintiffs sought leave to file an amended complaint.

On March 15, 2011, Robles, et al., v. Costco Wholesale Corporation was filed as a purported class action in the United States District Court for the Northern District of Illinois, Case No. 11-CV-1785. Plaintiffs seek to represent a class composed of all disabled persons with ambulatory impairments who depend upon the use of a wheelchair and are allegedly unable to obtain optometry services at the Company. Plaintiffs allege that the Company has failed to remove architectural barriers that prevent full and equal enjoyment of and access to its eye examination services. They allege violations of Title III of the Americans with Disabilities Act and the Rehabilitation Act of 1973. They seek injunctive relief and compensatory damages, costs, and attorneys’ fees. The Company has filed an answer denying the material allegations of the complaint.

Three shareholder derivative lawsuits were filed, ostensibly on behalf of the Company, against certain of its current and former officers and directors, relating to the Company’s stock option grants. One suit, Sandra Donnelly v. James Sinegal, et al., Case No. 08-2-23783-4 SEA (King County Superior Court), was filed in Washington state court on or about July 17, 2008. Plaintiff alleged, among

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COSTCO WHOLESALE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except share data) (Continued)

Note 11—Commitments and Contingencies (Continued)

other things, that individual defendants breached their fiduciary duties to the Company by “backdating” grants of stock options issued between 1997 and 2005 to various current and former executives, allegedly in violation of the Company’s shareholder-approved stock option plans. On April 3, 2009, on the Company’s motion the court dismissed the action, following the plaintiff’s disclosure that she had ceased to own Costco common stock, a requirement for her to pursue a derivative action. The second action, Pirelli Armstrong Tire Corp. Retiree Medical Benefits Trust v. James Sinegal, et al., Case No. 2:08-cv-01450-TSZ (United States District Court for the Western District of Washington), was filed on or about September 29, 2008, and named as defendants all but one of the Company’s directors and certain of its senior executives. Plaintiff alleged that defendants approved the issuance of backdated stock options, concealed the backdating of stock options, and refused to vindicate the Company’s rights by pursuing those who obtained improper incentive compensation. The third action, Daniel Buckfire v. James D. Sinegal, et al., No. 2:09-cv-00893-TSZ (United States District Court for the Western District of Washington), was filed on or about June 29, 2009, and contains allegations substantially similar to those in the Pirelli action. On August 12, 2009, the court entered an order consolidating the Pirelli and Buckfire actions. On October 2, 2009, plaintiffs Pirelli and Buckfire filed a consolidated amended complaint. On November 16, 2009, the defendants filed motions to dismiss the amended complaint on various grounds, including that plaintiffs failed to properly allege why a pre-suit demand had not been made on the Board of Directors. On September 20, 2010, a special committee of the Board of Directors of the Company approved an agreement in principle with the plaintiffs that would terminate the litigation. The agreement, which was subject among other things to federal district court approval, provided that the Company will pay an amount not to exceed $4.85 million in attorneys’ fees to plaintiffs’ counsel and will adopt or maintain certain governance, control and other process changes. On December 20, 2010, the parties executed a stipulation of settlement, and on January 14, 2011, plaintiffs filed a motion for court approval of the settlement. On February 28, 2011, the court entered an order that preliminarily approved, subject to further consideration at a settlement hearing, the proposed settlement of the action involving, among other things, a dismissal of the consolidated derivative actions with prejudice. On June 10, 2011, the court granted final approval to the settlement, and the case has been dismissed.

On October 4, 2006, the Company received a grand jury subpoena from the United States Attorney’s Office for the Central District of California, seeking records relating to the Company’s receipt and handling of hazardous merchandise returned by Costco members and other records. The Company has entered into a tolling agreement with the United States Attorney’s Office.

The Environmental Protection Agency (EPA) issued an Information Request to the Company, dated November 1, 2007, under the Clean Air Act. The EPA sought records regarding warehouses in the states of Arizona, California, Hawaii, and Nevada relating to compliance with regulations concerning air-conditioning and refrigeration equipment. On March 4, 2009, the Company was advised by the Department of Justice that the Department was prepared to allege that the Company has committed at least nineteen violations of the leak-repair requirements of 40 C.F.R. § 82.156(i) and at least seventy-four violations of the recordkeeping requirements of 40 C.F.R. § 82.166(k), (m) at warehouses in these four states. The Company has responded to these allegations, is engaged in communications with the Department about these and additional allegations made by letter dated September 10, 2009, and has entered into tolling agreements. Substantial penalties may be levied for violations of the Clean Air Act. The Company is cooperating with this inquiry.

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COSTCO WHOLESALE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except share data) (Continued)

Note 11—Commitments and Contingencies (Continued)

On October 7, 2009, the District Attorneys for San Diego, San Joaquin and Solano Counties filed a complaint, People of the State of California v. Costco Wholesale Corp., et al, No. 37-2009-00099912 (Superior Court for the County of San Diego), alleging on information and belief that the Company has violated and continues to violate provisions of the California Health and Safety Code and the Business and Professions Code through the use of certain spill clean-up materials at its gasoline stations. Relief sought includes, among other things, requests for preliminary and permanent injunctive relief, civil penalties, costs and attorneys’ fees. On September 2, 2010, the court dismissed the complaint without prejudice. An amended complaint was filed on September 13, 2010.

The Company has received notices from most states stating that they have appointed an agent to conduct an examination of the books and records of the Company to determine whether it has complied with state unclaimed property laws. In addition to seeking the turnover of unclaimed property subject to escheat laws, the states may seek interest, penalties, costs of examinations, and other relief. The State of Washington conducted such an examination on its own behalf and on February 4, 2011 issued an assessment. The Company filed suit on March 4, 2011, to contest the assessment.

Except where indicated otherwise above, a reasonable estimate of the possible loss or range of loss cannot be made at this time for the matters described. The Company does not believe that any pending claim, proceeding or litigation, either alone or in the aggregate, will have a material adverse effect on the Company’s financial position; however, it is possible that an unfavorable outcome of some or all of the matters, however unlikely, could result in a charge that might be material to the results of an individual fiscal quarter.

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COSTCO WHOLESALE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except share data) (Continued)

Note 12—Segment Reporting

The Company and its subsidiaries are principally engaged in the operation of membership warehouses in the United States, Canada, the United Kingdom, Japan, Australia, through majority-owned subsidiaries in Taiwan and Korea, and the Mexico joint venture. The Company’s reportable segments are largely based on management’s organization of the operating segments for operational decisions and assessments of financial performance, which considers geographic locations. As discussed in Note 1, the Company began consolidating Mexico on August 30, 2010. For segment reporting, these operations are included as a component of other international operations for the year ended August 28, 2011. Prior year amounts for Mexico are only included in total assets under United States operations in the table below, representing the equity method investment in the joint venture, as it was previously accounted for under the equity method and its operations were not consolidated. The material accounting policies of the segments are the same as those described in Note 1. All material inter-segment net sales and expenses have been eliminated in computing total revenue and operating income.

	United States Operations		Canadian Operations		Other International Operations		Total
Year Ended August 28, 2011
Total revenue	$	64,904	$	14,020	$	9,991	$	88,915
Operating income		1,395		621		423		2,439
Depreciation and amortization		640		117		98		855
Capital expenditures, net		876		144		270		1,290
Property and equipment, net		8,870		1,608		1,954		12,432
Total assets		18,558		3,741		4,462		26,761
Year Ended August 29, 2010
Total revenue	$	59,624	$	12,051	$	6,271	$	77,946
Operating income		1,310		547		220		2,077
Depreciation and amortization		625		107		63		795
Capital expenditures, net		804		162		89		1,055
Property and equipment, net		8,709		1,474		1,131		11,314
Total assets		18,247		3,147		2,421		23,815
Year Ended August 30, 2009
Total revenue	$	56,548	$	9,737	$	5,137	$	71,422
Operating income		1,273		354		150		1,777
Depreciation and amortization		589		90		49		728
Capital expenditures, net		904		135		211		1,250
Property and equipment, net		8,415		1,394		1,091		10,900
Total assets		17,228		2,641		2,110		21,979

Certain home office operating expenses are incurred on behalf of the Company’s Canadian and Other International Operations, but are included in the United States Operations above because those costs are not allocated internally and generally come under the responsibility of the Company’s United States management team.

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COSTCO WHOLESALE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except share data) (Continued)

Note 13—Quarterly Financial Data (Unaudited)

The two tables that follow reflect the unaudited quarterly results of operations for 2011 and 2010.

	52 Weeks Ended August 28, 2011(1)
	First Quarter 12 Weeks			Second Quarter 12 Weeks			Third Quarter 12 Weeks			Fourth Quarter 16 Weeks			Total 52 Weeks
REVENUE
Net sales	$	18,823		$	20,449		$	20,188		$	27,588		$	87,048
Membership fees		416			426			435			590			1,867
Total revenue		19,239			20,875			20,623			28,178			88,915
OPERATING EXPENSES
Merchandise costs		16,757			18,235	(2)		18,067	(2)		24,680	(2)		77,739
Selling, general and administrative		1,941			2,038			1,991			2,712			8,682
Preopening expenses		12			4			8			22			46
Provision for impaired assets and closing costs, net		4			2			1			2			9
Operating income		525			596			556			762			2,439
OTHER INCOME (EXPENSE)
Interest expense		(26	)		(27	)		(27	)		(36	)		(116	)
Interest income and other, net		5			4			5			46			60
INCOME BEFORE INCOME TAXES		504			573			534			772			2,383
Provision for income taxes		172			204			193			272			841
Net income including noncontrolling interests		332			369			341			500			1,542
Net income attributable to noncontrolling interests		(20	)		(21	)		(17	)		(22	)		(80	)
NET INCOME ATTRIBUTABLE TO COSTCO	$	312		$	348		$	324		$	478		$	1,462
NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO:
Basic	$	0.72		$	0.80		$	0.74		$	1.09		$	3.35
Diluted	$	0.71		$	0.79		$	0.73		$	1.08		$	3.30
Shares used in calculation (000’s)
Basic		434,099			436,682			436,977			436,596			436,119
Diluted		441,360			443,186			443,570			443,518			443,094
Dividends per share	$	0.205		$	0.205		$	0.240		$	0.240		$	0.89

⁽¹⁾  As discussed in Note 1, the Company began consolidating Mexico on August 30, 2010.

⁽²⁾  Includes a $6, $49, and $32 increase to merchandise costs for a LIFO inventory adjustment for the second, third and fourth quarters, respectively. (See note 1—Merchandise Inventories).

81

COSTCO WHOLESALE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except share data) (Continued)

Note 13—Quarterly Financial Data (Unaudited) (Continued)

	52 Weeks Ended August 29, 2010
	First Quarter 12 Weeks			Second Quarter 12 Weeks			Third Quarter 12 Weeks			Fourth Quarter 16 Weeks			Total 52 Weeks
REVENUE
Net sales	$	16,922		$	18,356		$	17,385		$	23,592		$	76,255
Membership fees		377			386			395			533			1,691
Total revenue		17,299			18,742			17,780			24,125			77,946
OPERATING EXPENSES
Merchandise costs		15,081			16,396			15,494			21,024			67,995
Selling, general and administrative		1,777			1,873	(3)		1,789			2,401			7,840
Preopening expenses		11			3			3			9			26
Provision for impaired assets and closing costs, net		2			0			3			3			8
Operating income		428			470			491			688			2,077
OTHER INCOME (EXPENSE)
Interest expense		(24	)		(26	)		(27	)		(34	)		(111	)
Interest income and other, net		18			30			10			30			88
INCOME BEFORE INCOME TAXES		422			474			474			684			2,054
Provision for income taxes		152			169			163			247			731
Net income including noncontrolling interests		270			305			311			437			1,323
Net income attributable to noncontrolling interests		(4	)		(6	)		(5	)		(5	)		(20	)
NET INCOME ATTRIBUTABLE TO COSTCO	$	266		$	299		$	306		$	432		$	1,303
NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO:
Basic	$	0.61		$	0.68		$	0.69		$	0.99		$	2.97
Diluted	$	0.60		$	0.67		$	0.68		$	0.97		$	2.92
Shares used in calculation (000’s)
Basic		437,173			439,786			440,973			437,071			438,611
Diluted		444,849			446,918			448,391			444,289			445,970
Dividends per share	$	0.180		$	0.180		$	0.205		$	0.205		$	0.77

⁽³⁾  Includes a $22 charge related to a change in employee benefits whereby certain unused time off will now be paid annually to our employees.

Note 14—Subsequent Event

On October 5, 2011, the Company’s Japanese subsidiary entered into an agreement to issue promissory notes through a private placement, bearing interest at 1.18%. These yen denominated notes are being issued in two series, with separate funding dates: $79 on October 5, 2011 and $52 on December 20, 2011. For both series of notes, interest is payable semi-annually, and principal is due on October 5, 2018. The Company guarantees all financing instruments issued by its Japanese subsidiary.

82

EXHIBIT INDEX

The following exhibits are filed as part of this Annual Report on Form 10-K or are incorporated herein by reference. Where an exhibit is incorporated by reference, the number that follows the description of the exhibit indicates the document to which cross-reference is made. See the end of this exhibit index for a listing of cross-reference documents.

Exhibit No.	Description
3.1	Articles of Incorporation of the registrant(1)
3.2	Bylaws of the registrant(14)
4.1	Registrant will furnish upon request copies of instruments defining the rights of holders of its long-term debt instruments
10.1*	Costco Wholesale Executive Health Plan(9)
10.1.1*	Costco Companies, Inc. 1993 Combined Stock Grant and Stock Option Plan (3)
10.1.2*	Amendments to Stock Option Plan, 1995(4)
10.1.3*	Amendments to Stock Option Plan, 1997(5)
10.1.4*	Amendments to Stock Option Plan, 2000(2)
10.1.5*	Amendments to Stock Option Plan, 2002(6)
10.1.6*	Costco Wholesale Corporation 2002 Stock Incentive Plan(6)
10.1.7*	Amended and Restated 2002 Stock Incentive Plan of Costco Wholesale Corporation(8)
10.1.8*	Second Restated 2002 Stock Incentive Plan Restricted Stock Unit Award Agreement-Employee(10)
10.1.9*	Second Restated 2002 Stock Incentive Plan Restricted Stock Unit Award Agreement-Non-Executive Director(10)
10.1.10*	Amendment to Second Restated 2002 Stock Incentive Plan(11)
10.1.11*	Amendment to Second Restated 2002 Stock Incentive Plan(12)
10.1.12*	Fourth Restated 2002 Stock Incentive Plan(15)
10.1.13*	Fifth Restated 2002 Stock Incentive Plan(16)
10.2*	Form of Indemnification Agreement(7)
10.4	Restated Corporate Joint Venture Agreement between The Price Company, Price Venture Mexico and Controladora Comercial Mexicana S.A. de C.V. dated March 1995(4)
10.4.1	Amendment No. 7 to Restated Corporate Joint Venture Agreement, dated December 2010
10.6.1*	Executive Employment Agreement between James D. Sinegal and Costco Wholesale Corporation
10.6.2*	Fiscal 2011 Executive Bonus Plan(13)
21.1	Subsidiaries of the Company
23.1	Consent of Independent Registered Public Accounting Firm
31.1	Rule 13(a) – 14(a) Certifications
32.1	Section 1350 Certifications
101.INS**	XBRL Instance Document
101.SCH**	XBRL Taxonomy Extension Schema Document

83

Exhibit No.	Description
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF**	XBRL Taxonomy Extension Definition Linkbase
101.LAB**	XBRL Taxonomy Extension Label Linkbase Document
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase Document

* Management contract, compensatory plan or arrangement.

** Users of this data are advised that, pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability.

1. Incorporated by reference to the exhibits filed as part of the Current Report on Form 8-K filed by Costco Wholesale Corporation on August 30, 1999.

2. Incorporated by reference to the exhibits filed as part of the Annual Report on Form 10-K of Costco Wholesale Corporation for the fiscal year ended September 3, 2000.

3. Incorporated by reference to the exhibits filed as part of the Registration Statement on Form S-4 of Price/Costco, Inc. (File No. 33-50359) dated September 22, 1993.

4. Incorporated by reference to the exhibits filed as part of the Annual Report on Form 10-K of Price/Costco, Inc. for the fiscal year ended September 3, 1995.

5. Incorporated by reference to the exhibits filed as part of the Annual Report on Form 10-K of Costco Companies, Inc. for the fiscal year ended August 30, 1998.

6. Incorporated by reference to the exhibits filed as part of the Registration Statement of Costco Wholesale Corporation on Form S-8 (File No. 333-82782) dated February 14, 2002.

7. Incorporated by reference to Annex A to Schedule 14A of Costco Wholesale Corporation filed December 13, 1999.

8. Incorporated by reference to the exhibits filed as part of the Registration Statement filed by Costco Wholesale Corporation on Form S-8 (File No. 333-129172) dated October 21, 2005.

9. Incorporated by reference to exhibits filed as part of the Quarterly Report on Form 10-Q of Costco Wholesale Corporation for the fiscal first quarter ended November 20, 2005.

10. Incorporated by reference to exhibits filed as part of the Quarterly Report on Form 10-Q of Costco Wholesale Corporation for the fiscal third quarter ended May 7, 2006.

11. Incorporated by reference to exhibits filed as part of the Quarterly Report on Form 10-Q of Costco Wholesale Corporation for the fiscal second quarter ended February 18, 2007.

12. Incorporated by reference to exhibits filed as part of the Current Report on Form 8-K filed by Costco Wholesale Corporation on January 31, 2008.

13. Incorporated by reference to exhibits filed as part of the Current Report on Form 8-K filed by Costco Wholesale Corporation on November 15, 2010.

14. Incorporated by reference to exhibits filed as part of the Current Report on Form 8-K filed by Costco Wholesale Corporation on August 24, 2010.

15. Incorporated by reference to the exhibits filed as part of the Annual Report on Form 10-K of Costco Wholesale Corporation for the fiscal year ended August 31, 2008.

16. Incorporated by reference to exhibits filed as part of the Quarterly Report on Form 10-Q filed by Costco Wholesale Corporation on March 17, 2010.

84

EX-10.4.1

Exhibit 10.4.1

AMENDMENT NO. 7

TO RESTATED CORPORATE JOINT VENTURE AGREEMENT

This amendment is effective the 10^th day of December, 2010, and is between Costco Venture Mexico (“CVM”) (formerly, “Price Venture Mexico,” a California corporation also known as “PRIMEX” in its own capacity and as the surviving entity in the merger between PRIMEX and The Price Company, a California corporation (“PRICE”)), and Controladora Comercial Mexicana, S.A.B. de C.V., a corporation organized under the laws of the United Mexican States (“CCM”), also known as “Comercial,” and is for the purpose of amending the Restated Corporate Joint Venture Agreement, dated February 15, 1995, between PRICE and PRIMEX on the one hand and Comercial on the other, as amended (the “Restated Joint Venture Agreement”).

The parties agree as follows:

1. The definition of “Primex” and “Price” is superseded and amended to mean, everywhere such terms appear in the Restated Joint Venture Agreement, “Costco Venture Mexico” or “CVM”.

2. The definition of “Price/Costco, Inc.” is superseded and amended to mean, everywhere such term appears in the Restated Joint Venture Agreement, “Costco Wholesale Corporation,” a Washington corporation, the surviving corporation in their merger.

3. The definition of “Comercial” is superseded and amended to mean, everywhere such term appears in the Restated Joint Venture Agreement, “Controladora Comercial Mexicana, S.A.B. de C.V.” or “CCM.”

4. The definition of “Shares” is superseded and amended to mean, everywhere such term appears in the Restated Joint Venture Agreement, “shares of capital stock of the Holding Company.”

5. The definition of “Holding Company” is superseded and amended to mean, everywhere such term appears in the Restated Joint Venture Agreement, “Costco de México, S.A. de C.V.”

6. The definition of “Management Agreements” is superseded and amended to mean, everywhere such term appears in the Restated Joint Venture Agreement, the surviving “Management Agreement,” dated February 15, 1995, as amended, between Costco Wholesale Corporation, a Washington corporation as the successor in interest of Price/Costco, Inc., formerly a Delaware corporation, and Costco de México, S.A. de C.V., as the successor in interest of its subsidiary Importadora Primex, S.A. de C.V., a corporation organized under the laws of the United Mexican States.

7. The definitions of “Pricemex Group” and “Pricemex Group Companies” are superseded and amended to mean, everywhere such terms appear in the Restated Joint Venture Agreement, the Holding Company and its subsidiaries.

8. The new definition “Trust Agreement” is added and shall mean everywhere such term appears in the Restated Joint Venture Agreement:

“That certain Irrevocable Management and Guaranty Trust Agreement dated December 10th, 2010 by and among CCM as Settlor and Third Place Beneficiary, CVM as First Place Beneficiary, Banco Invex, S.A., Institucion de Banca Multiple, Invex Grupo Financiero in its role as ALF Collateral Agent in benefit of the Lenders as Second Place Beneficiary, and Deutsche Bank Mexico, S.A., Institucion de Banca Multiple, Division Fiduciaria as Trustee.”

1

9. The definition of “Change in Control Event” is superseded and amended to mean, everywhere such term appears in the Restated Joint Venture Agreement, as “Change in Control Event:”

“Means (a) the acquisition of CCM by another entity (other than a reincorporation for the purpose of changing CCM’s domicile) by means of merger, consolidation, share exchange or other form of entity reorganization in which the outstanding capital stock of CCM is exchanged for, converted into or cancelled in consideration of obtaining the right to receive securities or other consideration issued by or on behalf of the acquiring entity as a result of which the holders of the capital stock of CCM immediately, before such transaction or series of related transactions, do not hold at least a majority of the voting power and at least a majority of the outstanding securities of the surviving, resulting or acquiring entity after such transaction or series of related transactions in substantially the same proportions as held by the holders of capital stock of CCM immediately before such transaction or series of related transactions; or (b) a transaction or series of related transactions in which a Person, entity, or a group of related Persons acquires direct or beneficial ownership of shares representing more than thirty-five percent (35%) of the outstanding voting power of CCM; or (c) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by CCM of all or substantially all the assets of CCM, or the sale or disposition (whether by merger or otherwise) of one or more subsidiaries of CCM if substantially all of the assets of CCM are held by such subsidiary or subsidiaries; provided however, that for purposes of this definition, assets shall be deemed “substantially all” if they constitute or represent either of: (i) 60% of CCM’s consolidated asset value; or (ii) 60% of consolidated sales for CCM during the previous twelve months; or (d) a change in the composition of the board of directors of CCM during any two-year period such that the individuals who, as of the beginning of such two-year period, constitute the board of directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the board of directors, provided, however, that for purposes of this definition, any individual who becomes a member of the board of directors subsequent to the beginning of the two-year period, whose election or nomination for election by CCM’s shareholders was approved by CCM’s shareholders shall be considered as though such individual were a member of the Incumbent Board, and provided further, however, that any such individual, whose initial assumption of office occurs as a result of or in connection with an actual or threatened solicitation of proxies or consents by or on behalf of a person or entity, or a group of related persons or entities, other than the board of directors, shall not be considered a member of the Incumbent Board.”

10. Section 2.1 of the Restated Joint Venture Agreement is superseded and amended to read as follows:

“Until the termination of the Trust Agreement, there shall be two Series of shares of capital stock of the Holding Company (the “Shares”), “A” and “B”. CVM Shares will be Series “A” Shares and CCM Shares will be Series “B” Shares, which are being held in trust in accordance with the Trust Agreement. Each Share will have one vote; provided that the Series “A” Shares will have the right to appoint four members of the Board of Directors and the Series “B” Shares will have the right to appoint three members of the Board of Directors. Notwithstanding the generality of the foregoing, the ownership rights and privileges with respect to the Shares shall be as more specifically set forth in the Articles of Incorporation and Bylaws of the Holding Company.”

11. Section 2.2 of the Restated Joint Venture Agreement is superseded and amended to read as follows:

“The current ownership of the Shares of the Holding Company is as set forth in the Amended Exhibit 2.2.”

2

12. The Restated Joint Venture Agreement is further amended by addition of a new Section 2.7.4 as follows:

“Notwithstanding anything to the contrary in this Agreement or the Trust Agreement, until the termination of the Trust Agreement, CVM may, in its sole discretion, advance or arrange loans or credits to the Holding Company or its subsidiaries, and the Holding Company or its subsidiaries, as the case may be, shall repay such loans or credits to CVM or its designee, upon such terms and conditions and at such times as may be agreed between the Holding Company and CVM, with or without the consent of CCM; provided, however, that CCM shall have the right to consent to any repayment of such loans if such repayment includes the capitalization of such loans and a possible dilution in the current ownership of the Shares of the Holding Company. Such loans may be unsecured, or secured by real estate or other assets of the Holding Company or its subsidiaries or both as CVM may require.”

13. Section 2.9.1 of the Restated Joint Venture Agreement is superseded and amended to read as follows:

“Except as provided for in the Trust Agreement, neither CCM nor CVM shall voluntarily sell, transfer, assign, pledge or otherwise dispose of all or any portion of its Shares in the Holding Company or its subsidiaries without the prior approval of the Board of Directors of the Holding Company. Likewise, except as provided in the Trust Agreement, neither CCM nor CVM shall suffer or permit the involuntary sale, transfer, assignment, pledge, or other disposal of its Shares in the Holding Company or its subsidiaries.”

14. Section 2.15 of the Restated Joint Venture Agreement is superseded and amended to read as follows:

“A party may make a voluntary advance to the Holding Company or its subsidiaries at any time to fund the working capital needs or expansion of the Holding Company or its subsidiaries in the ordinary course of business. Such advance will be made in U.S. Dollars and treated as a loan, and it will earn interest at the applicable rate provided under Section 2.6.2(ii).”

15. Section 4.1.1 of the Restated Joint Venture Agreement is superseded and amended to read as follows:

“Subject to the Management Agreement, and until the termination of the Trust Agreement, the Holding Company shall be managed by a seven member Board of Directors, three of whom shall be designated by CCM and four of whom shall be designated by CVM. The parties may mutually agree to name their respective alternates.”

16. Section 4.1.2 of the Restated Joint Venture Agreement is superseded and amended to read as follows:

“Until the termination of the Trust Agreement, the subsidiaries of the Holding Company shall each have a seven member Board of Directors, consisting of the same members as the Board of Directors of the Holding Company. As used herein, unless the context otherwise so requires, “Board of Directors” refers to the Board of Directors of any of the Holding Company or its subsidiaries.”

17. Section 4.1.5 of the Restated Joint Venture Agreement is superseded and amended to read as follows:

“The Board of Directors of the Holding Company shall meet not less than annually. The powers and duties, indemnification, and other terms and conditions of Board membership shall be as set forth in the articles of incorporation and bylaws of the Holding Company and its subsidiaries.”

3

18. Section 4.2 of the Restated Joint Venture Agreement is superseded and amended to read as follows:

“Until the termination of the Trust Agreement, no meeting of any Board of Directors of the Holding Company or its subsidiaries shall occur unless four directors are present and unless at least two of the directors designated by CVM are present. All decisions of the Board of Directors of any of the Holding Company or its subsidiaries shall require the affirmative majority of the entire Board of Directors (at least four directors).”

19. Section 4.6 of the Restated Joint Venture Agreement is superseded and amended as follows:

“4.6.1 Shareholder Meetings. Ordinary shareholder meetings of the Holding Company or any of its subsidiaries shall deal only with the matters mentioned in Article 181 of the General Law of Commercial Companies of Mexico. Extraordinary shareholder meetings shall deal with all other matters to be considered by the shareholders.

4.6.2 Quorum in Ordinary Shareholder Meetings. Ordinary shareholder meetings shall be deemed to be duly convened pursuant to first call when at least sixty percent of the shares of the capital stock of the company are represented therein. In case of second or subsequent calls, shareholder meetings shall be deemed as duly convened irrespective of the number of shares represented therein. In both cases, resolutions taken in ordinary shareholder meetings shall be adopted by a majority of the shares represented in the meetings.

4.6.3 Quorum in Extraordinary Meetings. Extraordinary shareholder meetings shall be deemed as duly convened pursuant to first call when at least sixty percent of the shares of capital stock of the company are represented therein. In case of second or subsequent calls, shareholder meetings shall be deemed as duly convened when at least fifty percent of the shares of the capital stock of the company are represented. In both cases, resolutions shall be adopted by a majority of the shares represented in the meetings.”

20. A new Section 8.2.7 is added to the Restated Joint Venture agreement as follows:

“8.2.7 Event of Default Under Trust Agreement. Notwithstanding the foregoing provisions in this Section 8.2, in the case of an Event of Default within the meaning of the Trust Agreement, the Buy-Out by CVM of CCM’s shares shall be governed by the provisions of the Trust Agreement.”

21. Section 8.3 of the Restated Joint Venture Agreement is superseded and amended as follows:

“8.3 Buy-Out.

8.3.1 Determination of FMV. In the event of a Buy-Out Notice under Sections 2.6.1, 2.8, 2.9, 8.1.4, 8.2.4 or 8.8, or an Insolvency Notice under Section 8.2.6 above, the Fair Market Value of the Holding Company and its subsidiaries as of the date the Buy-Out Notice is given shall be determined under Section 8.4 below.

8.3.2 CVM Election. CVM shall then have thirty (30) Days from the date upon which the Fair Market Value shall have been determined in which to elect (for itself or an Affiliate), by written notice, to purchase all of the Shares of CCM in the Holding Company for a price equal to one hundred percent (100%) of the Fair Market Value multiplied by CCM’S percentage ownership of the Shares of the Holding Company.

8.3.3 CCM Election. Provided that the Trust Agreement has terminated, if within the 30-Day period described in Section 8.3.2 CVM has not elected to purchase CCM’S Shares, CCM shall thereupon have a further thirty (30) Days in which to elect (to itself or an Affiliate), by written notice, to purchase all of the Shares of CVM in the Holding Company for a price equal to one hundred percent (100%) of the Fair Market Value multiplied by CVM’S percentage ownership of the Shares of the Holding Company.

4

8.3.4 Adjustment of FMV. If no election has been made under Sections 8.3.2 or 8.3.3 above, then, immediately upon expiration of the 30-Day period described in Section 8.3.3, the Fair Market Value shall become an amount that is ninety percent (90%) of the previous Fair Market Value, and the procedures of Sections 8.3.2, 8.3.3 and this 8.3.4 will continue to be repeated in sequence until an election is made under Section 8.3.2 or Section 8.3.3.

8.3.5 Purchase Terms. Once an election is made under Section 8.3.2 or Section 8.3.3, then (i) the parties shall promptly perform all acts required of them and use their best efforts to cause third parties to perform all acts required to enable the purchaser to consummate forthwith its purchase of the Shares (the “Required Acts”), and (ii) the purchaser shall pay the purchase price in cash and in U.S. Dollars within 120 Days after the date of the election or within twenty (20) Days after completion of Required Acts, whichever occurs earlier.”

22. Section 8.4 of the Restated Joint Venture Agreement is superseded and amended as follows:

“8.4 Fair Market Value.

8.4.1 Proposed & Agreed Values. Within thirty (30) Days after any Buy-Out Notice is given under Section 8.1 or Section 8.2 above, each of CCM and CVM should appoint an independent appraiser, who will be an internationally recognized financial advisory firm or investment bank with experience in mergers and acquisitions (the “CCM Appraiser” and “CVM Appraiser”, respectively).

8.4.2 Appraisers Determined Fair Market Value. Both appraisers must submit the respective appraisal reports to the parties within 45 (forty-five) business days following their appointment. If the difference between both appraisals (expressed as price per share) divided by the lower appraisal is 10% (ten percent) or less, the average between such appraisals (the “Appraisal Average”) will be used as the appraisal of price per share. However, in the event that the difference between both appraisals (expressed as price per share) divided by the lower appraisal is greater than 10% (ten percent), both appraisers must together appoint an independent third appraiser, who must be an internationally recognized investment bank or financial advisory firm with experience in mergers and acquisitions within 20 (twenty) business days, who must submit such appraisal report within 45 (forty-five) business days following his or her appointment. The appraisal of the third independent appraiser, in order to be accepted by the parties, must fall within the range of the appraisals carried out by the CCM Appraiser and the CVM Appraiser, and CCM and CVM agree that this will be considered the final appraisal (the “Independent Appraisal”). If the Independent Appraisal does not fall within the range of the appraisals carried out by the CCM Appraiser and the CVM Appraiser, the Independent Appraisal shall then be equal to the appraisal carried out by the CCM Appraiser or the CVM Appraiser to which the Independent Appraisal falls the closest. The Independent Appraisal shall be final. CCM and CVM will each pay its respective appraisal costs, and both of them will equally pay the costs of the Independent Appraisal. The CCM Appraiser and the CVM Appraiser will not share their appraisals or any other information related to their valuation analysis with the third independent appraiser.

In the event CCM, CVM or their appraisers (acting individually or jointly) fail to appoint their appraiser or the independent appraiser within the designated time period, any party may request that the American Arbitration Association make such appointment, and the appointed appraiser must be an internationally recognized investment bank or financial advisory firm with experience in mergers and acquisitions.

8.4.3 Fair Market Value. Either the Average Appraisal, or in the event of the appointment of an independent appraiser, the Independent Appraisal shall be the “Fair Market Value.”

5

23. Section 8.8 of the Restated Joint Venture Agreement is superseded and amended as follows:

“8.8 Change in Control. A Change in Control Event applies only to CCM. If there is a Change in Control Event with respect to CCM, then CVM may immediately elect to Buy-Out CCM for the Fair Market Value referenced in Section 8.4.”

24. Except as expressly stated above, all terms, conditions and provisions of the Restated Joint Venture Agreement shall remain unchanged and are here ratified and shall be in full force and effect.

6

[Signature Page for the Amendment No 7 to the Restated Corporate Joint Venture Agreement]

	CONTROLADORA COMERCIAL MEXICANA, S.A.B. DE C.V.		COSTCO VENTURE MEXICO
By:	/s/ Luis Felipe Gonzalez Solana	By:	/s/ James D. Sinegal
	Luis Felipe Gonzalez Solana		James D. Sinegal
	Attorney-in-Fact		Chief Executive Officer

7

Exhibit 2.2 Current Ownership of Shares

SHAREHOLDERS	FIXED CAPITAL		SHARES		VARIABLE CAPITAL
Costco Venture Mexico, Series “A”		500				1,589,349,441
Controladora Comercial Mexicana, Series “B” S.A.B. de C.V., held in trust		500				1,589,349,441
SUBTOTAL		1000				3,178,698,882
TOTAL				3,178,699,882

8

EX-10.6.1

Exhibit 10.6.1

Executive Employment Agreement between

James D. Sinegal and Costco Wholesale Corporation

August 22, 2011

Jim Sinegal

999 Lake Drive

Issaquah, WA 98027

Dear Jim:

This letter agreement confirms the terms of your employment with Costco Wholesale Corporation (the “Company”):

1. Employment. The Company employs you as its Chief Executive Officer.

2. Employment Term. The terms of this letter agreement cover one year, beginning August 29, 2011, and coinciding with the Company’s fiscal year 2012, unless otherwise terminated as provided below. The parties may renew this letter agreement from year-to-year upon agreement.

3. Salary and Benefits.

(a) You will receive a base salary of $350,000 for fiscal year 2012. The base salary will be paid to you in accordance with the Company’s standard payroll practices.

(b) You will be eligible for a bonus of up to $200,000. The amount of any bonus will be determined by the Board of Directors or the Compensation Committee, and will be paid to you in accordance with the Company’s standard practices.

(c) You will be eligible for an equity award under the Company’s Fifth Restated 2002 Stock Incentive Plan or its successor plan. The Board of Directors or the Compensation Committee will determine the amount of any grant.

(e) You will be eligible to participate in the Company’s employee benefit programs, in accordance with the terms and conditions of those programs.

4. Termination. The Company will have the right to terminate your employment at any time for “cause,” as determined under applicable law and policies of the Company. You may terminate your employment at any time upon not less than sixty (60) days prior written notice.

5. Miscellaneous. This letter agreement represents our complete agreement on these subjects. We can only amend this letter agreement by signing a written amendment. This letter will be governed by Washington law in all respects.

If you agree with the terms contained in this letter, please sign the enclosed copy of this letter and return it to me.

Sincerely,
Compensation Committee of the Board of Directors of Costco Wholesale Corporation
By:	/s/ Benjamin S. Carson, Sr., M.D.
	Benjamin S. Carson, Sr., M.D., Chair

Acknowledged and agreed:

/s/    Jim Sinegal
Jim Sinegal
Dated:	8/22/2011

EX-21.1

Exhibit 21.1

SUBSIDIARIES OF THE COMPANY

COSTCO WHOLESALE

CORPORATION SUBSIDIARIES

Subsidiaries	State or Other Jurisdiction of Incorporation or Organization	Name under Which Subsidiary Does Business
Costco Canada Holdings Inc.	Canadian Federal	Costco Canada Holdings Inc.
Costco Wholesale Membership, Inc.	California	Costco Wholesale Membership, Inc.
Costco Wholesale United Kingdom Ltd.	United Kingdom	Costco Wholesale United Kingdom Ltd.
Costco Wholesale Canada Ltd.	Canadian Federal	Costco Wholesale Canada, Ltd., Costco Wholesale
NW Re Ltd.	Arizona	NW Re Ltd.
PriceCostco International, Inc.	Nevada	PriceCostco International, Inc.
Costco Wholesale Korea, Ltd.	Korea	Costco Wholesale Korea, Ltd.
Costco de Mexico, S.A. de C.V.	Mexico	Costco de Mexico, S.A. de C.V.

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors

Costco Wholesale Corporation:

We consent to the incorporation by reference in the registration statements (Nos. 033-50799, 333-82782, 333-120523, 333-129172, 333-135052, 333-150014, 333-151748, and 333-165550) on Form S-8 and the registration statement (No. 333-140651) on Form S-3 of Costco Wholesale Corporation of our reports dated October 14, 2011, with respect to the consolidated balance sheets of Costco Wholesale Corporation as of August 28, 2011 and August 29, 2010, and the related consolidated statements of income, equity and comprehensive income, and cash flows for each of the 52-week periods ended August 28, 2011, August 29, 2010 and August 30, 2009, and the effectiveness of internal control over financial reporting as of August 28, 2011, which reports appear in the August 28, 2011 annual report on Form 10-K of Costco Wholesale Corporation.

/s/    KPMG LLP

Seattle, Washington

October 14, 2011

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, James D. Sinegal, certify that:

1) I have reviewed this Annual Report on Form 10-K of Costco Wholesale Corporation (“the registrant”);

2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

October 14, 2011

/s/    JAMES D. SINEGAL

James D. Sinegal

Chief Executive Officer

CERTIFICATIONS

I, Richard A. Galanti, certify that:

1) I have reviewed this Annual Report on Form 10-K of Costco Wholesale Corporation (“the registrant”);

2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

October 14, 2011

/s/    RICHARD A. GALANTI

Richard A. Galanti

Executive Vice President, Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION

In connection with the Annual Report of Costco Wholesale Corporation (the Company) on Form 10-K for the year ending August 28, 2011 (the Report), I, James D. Sinegal, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ JAMES D. SINEGAL	Date: October 14, 2011
James D. Sinegal
Chief Executive Officer

A signed original of this written statement has been provided to and will be retained by Costco Wholesale Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

CERTIFICATION

In connection with the Annual Report of Costco Wholesale Corporation (the Company) on Form 10-K for the year ending August 28, 2011 (the Report), I, Richard A. Galanti, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ RICHARD A. GALANTI	Date: October 14, 2011
Richard A. Galanti
Executive Vice President, Chief Financial Officer

A signed original of this written statement has been provided to and will be retained by Costco Wholesale Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Debt (Schedule Of Long-Term Debt) (Details) (USD $) In Millions, unless otherwise specified															1 Months Ended	12 Months Ended
	Aug. 28, 2011	Aug. 29, 2010	Aug. 28, 2011 5.5% Senior Notes Due March 2017 [Member]	Aug. 29, 2010 5.5% Senior Notes Due March 2017 [Member]	Feb. 28, 2007 5.5% Senior Notes Due March 2017 [Member]	Aug. 28, 2011 5.3% Senior Notes Due March 2012 [Member]	Aug. 29, 2010 5.3% Senior Notes Due March 2012 [Member]	Feb. 28, 2007 5.3% Senior Notes Due March 2012 [Member]	Aug. 28, 2011 2.695% Promissory Notes Due October 2017 [Member]	Aug. 29, 2010 2.695% Promissory Notes Due October 2017 [Member]	Oct. 31, 2007 2.695% Promissory Notes Due October 2017 [Member]	Aug. 28, 2011 Yen TIBOR Plus Margin Term Loan Due June 2018 [Member]	Aug. 29, 2010 Yen TIBOR Plus Margin Term Loan Due June 2018 [Member]	Jun. 30, 2008 Yen TIBOR Plus Margin Term Loan Due June 2018 [Member]	Aug. 31, 1997 3.5% Zero Coupon Convertible Subordinated Notes Due August 2017	Aug. 28, 2011 3.5% Zero Coupon Convertible Subordinated Notes Due August 2017	Aug. 29, 2010 3.5% Zero Coupon Convertible Subordinated Notes Due August 2017	Aug. 28, 2011 Other Long-Term Debt [Member]	Aug. 29, 2010 Other Long-Term Debt [Member]
Total long-term debt	$ 2,153	$ 2,141	$ 1,097	$ 1,096		$ 900	$ 899		$ 85	$ 77		$ 39	$ 35			$ 31	$ 32	$ 1	$ 2
Less current portion of 5.3% Senior Notes due March 2012	900	0
Long-term debt, excluding current portion	$ 1,253	$ 2,141
Loan interest rate, fixed			5.50%		5.50%	5.30%		5.30%	2.695%		2.695%
Loan interest rate, basis spread on variable rate												0.35%		0.35%
Yield to maturity percentage															3.50%	3.50%
Debt instrument, principal due date			March 2017		March 15, 2017	March 2012		March 15, 2012	October 2017		October 2017	June 2018		June 2018	August 2017	August 2017

XML

Consolidated Balance Sheets (Parenthetical) (USD $)	Aug. 28, 2011	Aug. 29, 2010
Consolidated Balance Sheets
Preferred stock, par value	$ 0.005	$ 0.005
Preferred stock, shares authorized	100,000,000	100,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.005	$ 0.005
Common stock, shares authorized	900,000,000	900,000,000
Common stock, shares issued	434,266,000	433,510,000
Common stock, shares outstanding	434,266,000	433,510,000

XML

Consolidated Statements Of Income (USD $) In Millions, except Share data in Thousands, unless otherwise specified	3 Months Ended													12 Months Ended
	May 08, 2011		Feb. 13, 2011		Nov. 21, 2010		May 09, 2010	Feb. 14, 2010		Nov. 22, 2009	Aug. 28, 2011		Aug. 29, 2010	Aug. 28, 2011		Aug. 29, 2010	Aug. 30, 2009
REVENUE
Net sales	$ 20,188	[1]	$ 20,449	[1]	$ 18,823	[1]	$ 17,385	$ 18,356		$ 16,922	$ 27,588	[1]	$ 23,592	$ 87,048	[1]	$ 76,255	$ 69,889
Membership fees	435	[1]	426	[1]	416	[1]	395	386		377	590	[1]	533	1,867	[1]	1,691	1,533
Total revenue	20,623	[1]	20,875	[1]	19,239	[1]	17,780	18,742		17,299	28,178	[1]	24,125	88,915	[1]	77,946	71,422
OPERATING EXPENSES
Merchandise costs	18,067	[1],[2]	18,235	[1],[2]	16,757	[1]	15,494	16,396		15,081	24,680	[1],[2]	21,024	77,739	[1]	67,995	62,335
Selling, general and administrative	1,991	[1]	2,038	[1]	1,941	[1]	1,789	1,873	[3]	1,777	2,712	[1]	2,401	8,682	[1]	7,840	7,252
Preopening expenses	8	[1]	4	[1]	12	[1]	3	3		11	22	[1]	9	46	[1]	26	41
Provision for impaired assets and closing costs, net	1	[1]	2	[1]	4	[1]	3	0		2	2	[1]	3	9	[1]	8	17
Operating income	556	[1]	596	[1]	525	[1]	491	470		428	762	[1]	688	2,439	[1]	2,077	1,777
OTHER INCOME (EXPENSE)
Interest expense	(27)	[1]	(27)	[1]	(26)	[1]	(27)	(26)		(24)	(36)	[1]	(34)	(116)	[1]	(111)	(108)
Interest income and other, net	5	[1]	4	[1]	5	[1]	10	30		18	46	[1]	30	60	[1]	88	58
INCOME BEFORE INCOME TAXES	534	[1]	573	[1]	504	[1]	474	474		422	772	[1]	684	2,383	[1]	2,054	1,727
Provision for income taxes	193	[1]	204	[1]	172	[1]	163	169		152	272	[1]	247	841	[1]	731	628
Net income including noncontrolling interests	341	[1]	369	[1]	332	[1]	311	305		270	500	[1]	437	1,542	[1]	1,323	1,099
Net income attributable to noncontrolling interests	(17)	[1]	(21)	[1]	(20)	[1]	(5)	(6)		(4)	(22)	[1]	(5)	(80)	[1]	(20)	(13)
NET INCOME ATTRIBUTABLE TO COSTCO	$ 324	[1]	$ 348	[1]	$ 312	[1]	$ 306	$ 299		$ 266	$ 478	[1]	$ 432	$ 1,462	[1]	$ 1,303	$ 1,086
NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO:
Basic	$ 0.74	[1]	$ 0.80	[1]	$ 0.72	[1]	$ 0.69	$ 0.68		$ 0.61	$ 1.09	[1]	$ 0.99	$ 3.35	[1]	$ 2.97	$ 2.50
Diluted	$ 0.73	[1]	$ 0.79	[1]	$ 0.71	[1]	$ 0.68	$ 0.67		$ 0.60	$ 1.08	[1]	$ 0.97	$ 3.30	[1]	$ 2.92	$ 2.47
Shares used in calculation (000's)
Basic	436,977	[1]	436,682	[1]	434,099	[1]	440,973	439,786		437,173	436,596	[1]	437,071	436,119	[1]	438,611	433,988
Diluted	443,570	[1]	443,186	[1]	441,360	[1]	448,391	446,918		444,849	443,518	[1]	444,289	443,094	[1]	445,970	440,454
Dividends per share	$ 0.240	[1]	$ 0.205	[1]	$ 0.205	[1]	$ 0.205	$ 0.180		$ 0.180	$ 0.240	[1]	$ 0.205	$ 0.89	[1]	$ 0.77	$ 0.68

[1] As discussed in Note 1, the Company began consolidating Mexico on August 30, 2010.

[2] Includes a $6, $49, and $32 increase to merchandise costs for a LIFO inventory adjustment for the second, third and fourth quarters, respectively. (See note 1—Merchandise Inventories).

[3] Includes a $22 charge related to a change in employee benefits whereby certain unused time off will now be paid annually to our employees.

XML

Income Taxes (Schedule Of Foreign And Domestic Income Taxes) (Details) (USD $) In Millions	3 Months Ended												12 Months Ended
	May 08, 2011		Feb. 13, 2011		Nov. 21, 2010		May 09, 2010	Feb. 14, 2010	Nov. 22, 2009	Aug. 28, 2011		Aug. 29, 2010	Aug. 28, 2011		Aug. 29, 2010	Aug. 30, 2009
Income Taxes
Federal: Current													$ 409		$ 445	$ 396
Federal: Deferred													74		1	67
Total federal													483		446	463
State: Current													78		79	66
State: Deferred													14		5	12
Total state													92		84	78
Foreign: Current													270		200	94
Foreign: Deferred													(4)		1	(7)
Total foreign													266		201	87
Total provision for income taxes	$ 193	[1]	$ 204	[1]	$ 172	[1]	$ 163	$ 169	$ 152	$ 272	[1]	$ 247	$ 841	[1]	$ 731	$ 628

[1] As discussed in Note 1, the Company began consolidating Mexico on August 30, 2010.

XML

Debt (Schedule Of Long-Term Debt Maturities) (Details) (USD $) In Millions	Aug. 28, 2011	Aug. 29, 2010
Debt
2012	$ 900
2013	0
2014	0
2015	0
2016	0
Thereafter	1,253
Total long-term debt	$ 2,153	$ 2,141

XML

Summary Of Significant Accounting Policies (Policy)

12 Months Ended

Aug. 28, 2011

Summary Of Significant Accounting Policies

Basis Of Presentation

Basis of Presentation

The consolidated financial statements include the accounts of Costco Wholesale Corporation, a Washington corporation, its wholly-owned subsidiaries, subsidiaries in which it has a controlling interest, consolidated entities in which it has made equity investments or has other interests through which it has majority-voting control or it exercises the right to direct the activities that most significantly impact the entity's performance (Costco or the Company). The Company reports noncontrolling interests in consolidated entities as a component of equity separate from the Company's equity. All material inter-company transactions between and among the Company and its consolidated subsidiaries and other consolidated entities have been eliminated in consolidation.

In June 2009, the Financial Accounting Standards Board (FASB) issued amended guidance concerning whether a company's variable interest(s) in an entity constitute a controlling financial interest. The Company adopted this guidance on August 30, 2010 (at the beginning of its fiscal year 2011). As a result of the adoption, the Company determined that its 50%-owned joint venture, Costco Mexico (Mexico), would be consolidated on a prospective basis beginning August 30, 2010. Costco operates 32 warehouses in Mexico similar to Costco warehouses operated elsewhere.

Historically, the Company accounted for its 50% interest in Mexico under the equity method of accounting. The Company's equity method investment in Mexico included in other assets in the accompanying consolidated balance sheet as of August 29, 2010 totaled $357, which was derecognized as part of the initial consolidation of the joint venture on August 30, 2010. Total assets and liabilities increased by approximately 3% due to the initial consolidation and the 50% noncontrolling interest in Mexico of $357 was recorded as a component of equity as a result of the initial consolidation. The initial consolidation of Mexico had no impact on net income or net income per common share attributable to Costco (Net Income). The Company's net income excludes income attributable to noncontrolling interests in its operations in Mexico, Korea, and Taiwan. In December 2010, the Company and its 50% joint venture partner amended the Mexico joint venture agreements. As a result, the Company obtained, subject to certain continuing conditions, majority-voting control of the joint venture. As the Company had previously consolidated the joint venture, these amendments did not impact the Company's consolidated financial statements.

The Company operates membership warehouses that offer low prices on a limited selection of nationally branded and select private-label products in a wide range of merchandise categories in no-frills, self-service facilities. At August 28, 2011, Costco operated 592 warehouses worldwide which included: 429 U.S. locations (in 40 U.S. states and Puerto Rico), 82 Canadian locations (in nine Canadian provinces), 32 Mexico locations, 22 United Kingdom locations, nine Japan locations, eight Taiwan locations, seven Korea locations, and three Australia locations.

Fiscal Year End

Fiscal Year End

The Company's fiscal year ends on the Sunday closest to August 31. References to 2011, 2010, and 2009 relate to the 52-week fiscal years ended August 28, 2011, August 29, 2010, and August 30, 2009, respectively.

Use Of Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions.

Reclassifications

Reclassifications

Certain reclassifications have been made to prior fiscal year amounts or balances to conform to the presentation in the current fiscal year. These reclassifications did not have a material impact on the Company's previously reported consolidated financial statements.

Cash And Cash Equivalents

Cash and Cash Equivalents

The Company considers as cash and cash equivalents all highly liquid investments with a maturity of three months or less at the date of purchase and proceeds due from credit and debit card transactions with settlement terms of less than one week. Credit and debit card receivables were $982 and $862 at the end of 2011 and 2010, respectively.

Short-Term Investments

Short-term Investments

In general, short-term investments have a maturity of three months to five years at the date of purchase. Investments with maturities beyond five years may be classified, based on the Company's determination, as short-term based on their highly liquid nature and because such marketable securities represent the investment of cash that is available for current operations. Short-term investments classified as available-for-sale are recorded at fair value using the specific identification method with the unrealized gains and losses reflected in accumulated other comprehensive income until realized. Realized gains and losses from the sale of available-for-sale securities, if any, are determined on a specific identification basis and all are recorded in interest income and other, net in the consolidated statements of income. Short-term investments classified as held-to-maturity are financial instruments that the Company has the intent and ability to hold to maturity and are reported net of any related amortization and are not remeasured to fair value on a recurring basis.

Fair Value Of Financial Instruments

Fair Value of Financial Instruments

The carrying value of the Company's financial instruments, including cash and cash equivalents, receivables, and accounts payable approximate fair value due to their short-term nature or variable interest rates. See Notes 2, 3, and 4 for the carrying value and fair value of the Company's investments, derivative instruments, and fixed rate debt.

The Company follows the authoritative guidance for fair value measurements relating to financial and nonfinancial assets and liabilities, including the presentation of required disclosures, in its consolidated financial statements. This guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The guidance also establishes a fair value hierarchy, which requires maximizing the use of observable inputs when measuring fair value. The three levels of inputs that may be used are:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.

Level 3: Significant unobservable inputs that are not corroborated by market data.

The following valuation techniques are used to measure fair value:

Level 1 primarily consists of financial instruments, such as money market mutual funds, whose value is based on quoted market prices, such as quoted net asset values published by the fund as supported in an active market, exchange-traded instruments and listed equities.

Level 2 includes assets and liabilities where quoted market prices are unobservable but observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities, or could be obtained from data providers or pricing vendors. The Company's Level 2 assets and liabilities primarily include United States (U.S.) government and agency securities, Federal Deposit Insurance Corporation (FDIC) insured corporate bonds, investments in corporate notes and bonds, asset and mortgage-backed securities, and forward foreign exchange contracts. Valuation methodologies are based on "consensus pricing," using market prices from a variety of industry-standard independent data providers or pricing that considers various assumptions, including time value, yield curve, volatility factors, credit spreads, default rates, loss severity, current market and contractual prices for the underlying instruments or debt, broker and dealer quotes, as well as other relevant economic measures. All are observable in the market or can be derived principally from or corroborated by observable market data, for which the Company typically receives independent external valuation information.

Level 3 is comprised of significant unobservable inputs for valuations from the Company's independent data and a primary pricing vendor that are also supported by little, infrequent, or no market activity. Management considers indicators of significant unobservable inputs such as the lengthening of maturities, later-than-scheduled payments, and any remaining individual securities that have otherwise matured, as indicators of Level 3. Assets and liabilities are considered Level 3 when their fair value inputs are unobservable, unavailable or management concludes that even though there may be some observable inputs, an item should be classified as a Level 3 based on other indicators of significant unobservable inputs, such as situations involving limited market activity, where determination of fair value requires significant judgment or estimation. The Company utilizes the services of a primary pricing vendor, which does not provide access to its proprietary valuation models, inputs and assumptions. While the Company is not provided access to proprietary models of the vendor, the Company reviewed and contrasted pricing received with other pricing sources to ensure accuracy of each asset class for which prices are provided. The Company's review also included an examination of the underlying inputs and assumptions for a sample of individual securities across asset classes, credit rating levels and various durations, a process that is continually performed for each reporting period. In addition, the pricing vendor has an established challenge process in place for all security valuations, which facilitates identification and resolution of potentially erroneous prices. The Company believes that the prices received from the primary pricing vendor are representative of exit prices in accordance with authoritative guidance, and are classified appropriately in the fair value hierarchy.

Our current financial liabilities have fair values that approximate their carrying values. Our long-term financial liabilities consist of long-term debt, which is recorded on the balance sheet at issuance price less unamortized discount.

Receivables, Net

Receivables, net

Receivables consist of the following at the end of 2011 and 2010:

	2011			2010
Vendor receivables, and other	$	487		$	448
Reinsurance receivables		201			196
Receivables from governmental entities		98			64
Other receivables		96			103
Third-party pharmacy receivables		86			75
Allowance for doubtful accounts		(3	)		(2	)
Receivables, Net	$	965		$	884

Vendor receivables include payments from vendors in the form of volume rebates or other purchase discounts that are evidenced by signed agreements and are reflected in the carrying value of the inventory when earned or as the Company progresses towards earning the rebate or discount and as a component of merchandise costs as the merchandise is sold. Vendor receivable balances are generally presented on a gross basis separate from any related payable due. In certain circumstances, these receivables may be settled against the related payable to that vendor. Other consideration received from vendors is generally recorded as a reduction of merchandise costs upon completion of contractual milestones, terms of the related agreement, or by other systematic approach.

Reinsurance receivables are held by the Company's wholly-owned captive insurance subsidiary. The receivable balance represents amounts ceded through reinsurance arrangements, and are reflected on a gross basis, separate from the amounts assumed under reinsurance, which are presented on a gross basis within other current liabilities on the consolidated balance sheets.

Receivables from governmental entities largely consists of various tax related items.

Third-party pharmacy receivables generally relate to amounts due from members' insurance companies for the amount above their co-pay, which is collected at the point-of-sale.

Amounts are recorded net of an allowance for doubtful accounts. Management determines the allowance for doubtful accounts based on historical experience and application of the specific identification method. Write-offs of receivables were immaterial for fiscal years 2011, 2010, or 2009.

Merchandise Inventories

Merchandise Inventories

Merchandise inventories consist of the following at the end of 2011 and 2010:

	2011		2010
United States (primarily LIFO)	$	4,548	$	4,150
Foreign (FIFO)		2,090		1,488
Merchandise Inventories	$	6,638	$	5,638

Merchandise inventories are valued at the lower of cost or market, as determined primarily by the retail inventory method, and are stated using the last-in, first-out (LIFO) method for substantially all U.S. merchandise inventories. Merchandise inventories for all foreign operations are primarily valued by the retail inventory method and are stated using the first-in, first-out (FIFO) method. The Company believes the LIFO method more fairly presents the results of operations by more closely matching current costs with current revenues. The Company records an adjustment each quarter, if necessary, for the estimated effect of inflation or deflation, and these estimates are adjusted to actual results determined at year-end.

Due to inflation in 2011, the merchandise inventories valued at LIFO were lower than the FIFO value, resulting in a charge to merchandise costs of $87. During 2009, due to overall net deflationary trends, the Company recorded a $32 benefit to merchandise costs to adjust inventories valued at LIFO. At the end of 2010, merchandise inventories valued at LIFO approximated FIFO after considering the lower of cost or market principle.

The Company provides for estimated inventory losses between physical inventory counts as a percentage of net sales, using estimates based on the Company's experience. The provision is adjusted periodically to reflect the results of the actual physical inventory counts, which generally occur in the second and fourth fiscal quarters of the fiscal year. Inventory cost, where appropriate, is reduced by estimates of vendor rebates when earned or as the Company progresses towards earning those rebates, provided that they are probable and reasonably estimable.

Property And Equipment

Property and Equipment

Property and equipment are stated at cost. In general, new building additions are separated into components, each with its own estimated useful life. Depreciation and amortization expense is computed using the straight-line method over estimated useful lives or the lease term, if shorter. Leasehold improvements incurred after the beginning of the initial lease term are depreciated over the shorter of the estimated useful life of the asset or the remaining term of the initial lease plus any renewals that are reasonably assured at the date the leasehold improvement is made.

Estimated useful lives for financial reporting purposes are as follows:

	Years
Buildings and improvements	5 - 50
Equipment and fixtures	3- 20

Repair and maintenance costs are expensed when incurred. Expenditures for remodels, refurbishments and improvements that add to or change the way an asset functions or that extend the useful life of an asset are capitalized. Assets that were removed during the remodel, refurbishment or improvement are retired. When assets are retired or sold, the asset costs and related accumulated depreciation are eliminated, with any remaining gain or loss recorded.

Impairment Of Long-Lived Assets

Impairment of Long-Lived Assets

The Company periodically evaluates long-lived assets for impairment when relocating or closing a warehouse or when events or changes in circumstances occur that may indicate the carrying amount of the asset group, generally an individual warehouse, may not be fully recoverable. For asset groups to be held and used, including warehouses to be relocated, the carrying value of the asset group is considered recoverable when the estimated future undiscounted cash flows generated from the use and eventual disposition of the asset group exceed the group's net carrying value. In the event that the carrying value is not considered recoverable, an impairment loss would be recognized for the asset group to be held and used equal to the excess of the carrying value above the estimated fair value of the asset group. For asset groups classified as held for sale (disposal group), the carrying value is compared to the disposal group's fair value less costs to sell. The Company estimates fair value by obtaining market appraisals from third party brokers or other valuation techniques. In 2011, 2010, and 2009, the Company recorded impairment charges of $1, $2, and $11, respectively, included in provision for impaired assets and closing costs, net and interest income and other in the consolidated statements of income. In 2009, the charge was primarily related to the closure of its two Costco Home locations in July 2009.

Assets classified as held for sale were not material as of August 28, 2011 or August 29, 2010.

Other Assets

Other Assets

Other assets consist of the following at the end of 2011 and 2010:

	2011		2010
Prepaid rents, lease costs, and long-term deposits	$	211	$	186
Tax-related assets		179		18
Goodwill, net		74		71
Cash surrender value of life insurance		64		65
Other		95		96
Investment in Mexico		0		357
Other Assets	$	623	$	793

As previously discussed, the Company began consolidating Mexico at the beginning of 2011, on a prospective basis. The amount of retained earnings that represented undistributed earnings of Mexico was $307 at the end of 2010. The Company did not make any capital contributions to its investment in Mexico in 2010 or 2009. The investments and equity in earnings of other unconsolidated joint ventures are not material.

Tax-related assets represent amounts deposited with taxing authorities in connection with ongoing income tax audits and the Company's long term deferred tax assets.

Goodwill resulting from certain business combinations is reviewed for impairment in the fourth quarter of each fiscal year, or more frequently if circumstances dictate. No impairment of goodwill has been incurred to date.

The Company adjusts the carrying value of its employee life insurance contracts to the net cash surrender value at the end of each reporting period.

Accounts Payable

Accounts Payable

The Company's banking system provides for the daily replenishment of major bank accounts as checks are presented. Accordingly, included in accounts payable at the end of 2011 and 2010 are $108 and $617, respectively, representing the excess of outstanding checks over cash on deposit at the banks on which the checks were drawn.

Insurance/Self Insurance Liabilities

Insurance/Self-Insurance Liabilities

The Company uses a combination of insurance and self-insurance mechanisms, including a wholly-owned captive insurance entity and participation in a reinsurance program, to provide for potential liabilities for workers' compensation, general liability, property damage, directors and officers liability, vehicle liability, and employee health care benefits. The reinsurance agreement is one year in duration and new agreements are entered into by each participant at their discretion at the commencement of the next fiscal year. Liabilities associated with the risks that are retained by the Company are not discounted and are estimated, in part, by considering historical claims experience, demographic factors, severity factors, and other actuarial assumptions. The estimated accruals for these liabilities could be significantly affected if future occurrences and claims differ from these assumptions and historical trends. As of the end of 2011 and 2010, these insurance liabilities were $595 and $541 in the aggregate, respectively, and were included in accounts payable, accrued salaries and benefits, and other current liabilities on the consolidated balance sheets, classified based on their nature.

The Company's wholly-owned captive insurance subsidiary (the captive) receives direct premiums, which are netted against the Company's premium costs in selling, general and administrative expenses, in the consolidated statements of income. The captive participates in a reinsurance program that includes other third-party members. The member agreements and practices of the reinsurance program limit any participating members' individual risk. Income statement adjustments related to the reinsurance program and related impacts to the consolidated balance sheets are recognized as information becomes known. In the event the Company leaves the reinsurance program, the Company is not relieved of its primary obligation to the policyholders for activity prior to the termination of the annual agreement.

Other Current Liabilities

Other Current Liabilities

Other current liabilities consist of the following at the end of 2011 and 2010:

	2011		2010
Accrued member rewards	$	602	$	522
Insurance-related liabilities		276		263
Tax-related liabilities		122		79
Cash card liability		112		100
Deferred sales		141		98
Other current liabilities		96		86
Vendor consideration liabilities		66		57
Sales return reserve		74		72
Interest payable		51		51
Other Current Liabilities	$	1,540	$	1,328

Derivatives

Derivatives

The Company is exposed to foreign-currency exchange-rate fluctuations in the normal course of business. The Company manages these fluctuations, in part, through the use of forward foreign-exchange contracts, seeking to economically hedge the impact of fluctuations of foreign exchange on known future expenditures denominated in a foreign-currency. The contracts are intended primarily to economically hedge exposure to U.S. dollar merchandise inventory expenditures made by the Company's international subsidiaries or other entities whose functional currency is other than the U.S. dollar. Currently, these contracts do not qualify for derivative hedge accounting. The Company seeks to mitigate risk with the use of these contracts and does not intend to engage in speculative transactions. These contracts do not contain any credit-risk-related contingent features. The aggregate notional amounts of forward foreign-exchange contracts were $247 and $225 at the end of 2011 and 2010, respectively.

The Company seeks to manage counterparty risk associated with these contracts by limiting transactions to counterparties with which the Company has an established banking relationship. There can be no assurance, however, that this practice effectively mitigates counterparty risk. The contracts are limited to less than one year in duration. See Note 3 for information on the fair value of open, unsettled forward foreign-exchange contracts as of August 28, 2011, and August 29, 2010.

The amount of net foreign-currency transaction gains or losses recognized in interest income and other, net in the accompanying consolidated statements of income relating to forward foreign-exchange contracts were nominal in 2011, 2010 and 2009. These gains and losses are largely offset by the impact of revaluing related foreign currency denominated payables, which are also recognized in interest income and other, net.

The Company is exposed to risks due to fluctuations in prices for the energy it consumes, particularly electricity and natural gas, which it seeks to partially mitigate through the use of fixed-price contracts for approximately 36% of its warehouses and other facilities, primarily in the U.S. and Canada. The Company also enters into variable-priced contracts for some purchases of natural gas, in addition to fuel for its gas stations, on an index basis. These contracts meet the characteristics of derivative instruments, but generally qualify for the "normal purchases or normal sales" exception under authoritative guidance and thus require no mark-to-market adjustment.

Foreign-Currency

Foreign-Currency

The functional currencies of the Company's international subsidiaries are the local currency of the country in which the subsidiary is located. Assets and liabilities recorded in foreign currencies are translated at the exchange rate on the balance sheet date. Translation adjustments resulting from this process are recorded in accumulated other comprehensive income. Revenues and expenses of the Company's consolidated foreign operations are translated at average rates of exchange prevailing during the year.

The Company recognizes foreign-currency transaction gains and losses related to revaluing all monetary assets and liabilities denominated in currencies other than the functional currency, generally the U.S. dollar payables of consolidated subsidiaries to their functional currency, in interest income and other, net in the accompanying consolidated statements of income. These gains and losses were $8 and $13 in 2011 and 2010, respectively and not significant in 2009.

Revenue Recognition

Revenue Recognition

The Company generally recognizes sales, net of estimated returns, at the time the member takes possession of merchandise or receives services. When the Company collects payments from customers prior to the transfer of ownership of merchandise or the performance of services, the amounts received are generally recorded as deferred sales included in other current liabilities on the consolidated balance sheets until the sale or service is completed. The Company reserves for estimated sales returns based on historical trends in merchandise returns, net of the estimated net realizable value of merchandise inventories to be returned and any estimated disposition costs. Amounts collected from members, which under common trade practices are referred to as sales taxes, are recorded on a net basis.

The Company evaluates whether it is appropriate to record the gross amount of merchandise sales and related costs or the net amount earned as commissions. Generally, when Costco is the primary obligor, is subject to inventory risk, has latitude in establishing prices and selecting suppliers, can influence product or service specifications, or has several but not all of these indicators, revenue is recorded on a gross basis. If the Company is not the primary obligor and does not possess other indicators of gross reporting as noted above, it records the net amounts as commissions earned, which is reflected in net sales.

Membership fee revenue represents annual membership fees paid by substantially all of the Company's members. The Company accounts for membership fee revenue, net of estimated refunds, on a deferred basis, whereby revenue is recognized ratably over the one-year membership period. As previously disclosed, effective with renewals occurring on and after March 1, 2009, the Company changed an element of its membership renewal policy. Memberships renewed within two months after expiration of the current membership year are extended for twelve months from the expiration date. (Under the previous policy, renewals within six months of the expiration date were extended for twelve months from the expiration date.) Memberships renewed more than two months after such expiration date are extended for twelve months from the renewal date. This change has had an immaterial effect of deferring recognition of certain membership fees paid by late-renewing members.

The Company's Executive Members qualify for a 2% reward (up to a maximum of approximately five hundred dollars per year on qualified purchases made at Costco), which can be redeemed at Costco warehouses. The Company accounts for this reward as a reduction in sales, with the related accrued member rewards liability included in other current liabilities on the consolidated balance sheets. The sales reduction and corresponding liability are computed after giving effect to the estimated impact of non-redemptions based on historical data. The net reduction in sales was $790, $688, and $610 in 2011, 2010, and 2009, respectively.

Merchandise Costs

Merchandise Costs

Merchandise costs consist of the purchase price of inventory sold, inbound shipping charges and all costs related to the Company's depot operations, including freight from depots to selling warehouses, and are reduced by vendor consideration. Merchandise costs also include salaries, benefits and depreciation on production equipment in certain fresh foods and ancillary departments.

Selling, General And Administrative Expenses

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist primarily of salaries, benefits and workers' compensation costs for warehouse employees, other than fresh foods departments and certain ancillary businesses, as well as all regional and home office employees, including buying personnel. Selling, general and administrative expenses also include utilities, bank charges, rent and substantially all building and equipment depreciation, as well as other operating costs incurred to support warehouse operations.

Marketing And Promotional Expenses

Marketing and Promotional Expenses

Costco's policy is generally to limit marketing and promotional expenses to new warehouse openings, occasional direct mail marketing to prospective new members and direct mail marketing programs to existing members promoting selected merchandise. Marketing and promotional costs are expensed as incurred and are included in selling, general and administrative expenses in the accompanying consolidated statements of income.

Stock-Based Compensation

Stock-Based Compensation

Compensation expense for all stock-based awards granted is recognized using the straight-line method. The fair value of restricted stock units (RSUs) is calculated as the market value of the common stock on the measurement date less the present value of the expected dividends forgone during the vesting period. The fair value of stock options is measured using the Black-Scholes valuation model. While options and RSUs granted to employees generally vest over five years, all grants allow for either daily or quarterly vesting of the pro-rata number of stock-based awards that would vest on the next anniversary of the grant date in the event of retirement or voluntary termination. The historical experience rate of actual forfeitures has been minimal. As such, the Company does not reduce stock-based compensation for an estimate of forfeitures because the estimate is inconsequential in light of historical experience and considering the awards vest on either a daily or quarterly basis. The impact of actual forfeitures arising in the event of involuntary termination is recognized as actual forfeitures occur, which generally has been infrequent. Stock options have a ten-year term. Stock-based compensation expense is predominately included in selling, general and administrative expenses on the consolidated statements of income. See Note 7 for additional information on the Company's stock-based compensation plans.

Leases

Leases

The Company leases land and/or buildings at warehouses and certain other office and distribution facilities primarily under operating leases. Operating leases expire at various dates through 2051, with the exception of one lease in the Company's United Kingdom subsidiary, which expires in 2151. These leases generally contain one or more of the following options which the Company can exercise at the end of the initial lease term: (a) renewal of the lease for a defined number of years at the then-fair market rental rate or rate stipulated in the lease agreement; (b) purchase of the property at the then-fair market value; or (c) right of first refusal in the event of a third party purchase offer.

The Company accounts for its lease expense with free rent periods and step-rent provisions on a straight-line basis over the original term of the lease, from the date the Company has control of the property. Certain leases provide for periodic rental increases based on the price indices, and some of the leases provide for rents based on the greater of minimum guaranteed amounts or sales volume.

The Company has entered into four capital leases for warehouse locations, expiring at various dates through 2040. Capital lease assets are included in buildings and improvements in the accompanying consolidated balance sheets. Amortization expense on capital lease assets is recorded as depreciation expense and is predominately included in selling, general and administrative expenses. Capital lease liabilities are recorded at the lesser of the estimated fair market value of the leased property or the net present value of the aggregate future minimum lease payments and are included in other current liabilities and other liabilities. Interest on these obligations is included in interest expense.

Preopening Expenses

Preopening Expenses

Preopening expenses related to new warehouses, new regional offices and other startup operations are expensed as incurred.

Provision For Impaired Assets And Closing Costs, Net

Provision for Impaired Assets and Closing Costs, Net

Warehouse closing costs incurred relate principally to expenses associated with the Company's relocation of certain warehouses (that were not otherwise impaired) to larger and better-located facilities. The provisions for 2011, 2010, and 2009 included charges in the amounts indicated below:

	2011		2010		2009
Warehouse closing expenses	$	8	$	6	$	9
Impairment of long-lived assets		1		2		8
Provision for Impaired Assets and Closing Costs, Net	$	9	$	8	$	17

Warehouse closing expenses primarily relate to accelerated building depreciation based on the shortened useful life through the expected closing date and remaining lease obligations, net of estimated sublease income, for leased locations. At the end of 2011 and 2010, the Company's reserve for warehouse closing costs was $5 and primarily related to estimated future lease obligations and other estimated contractual obligations associated with exiting the properties.

Interest Income And Other, Net

Interest Income and Other, Net

Interest income and other, net includes:

	2011		2010		2009
Interest income, net	$	41	$	23	$	27
Earnings of affiliates and other, net		19		65		31
Interest Income and Other, Net	$	60	$	88	$	58

As previously discussed, Costco began consolidating Mexico at the beginning of 2011, on a prospective basis. For 2010 and 2009, the equity in earnings of Mexico is included in interest income and other, net in the accompanying consolidated statements of income, and was $41 and $32, respectively.

Other-Than-Temporary Impairment

The Company periodically evaluates unrealized losses in its investment securities for other-than-temporary impairment using both qualitative and quantitative criteria. In the event a security is deemed to be other-than-temporarily impaired, the Company recognizes the credit loss component in interest income and other, net in the consolidated statements of income. The Company generally only invests in debt securities.

Income Taxes

Income Taxes

The Company accounts for income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credits and loss carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences and carry-forwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established when necessary to reduce deferred tax assets to amounts expected to be realized.

The determination of the Company's provision for income taxes requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. Significant judgment is required in assessing the timing and amounts of deductible and taxable items and the probability of sustaining uncertain tax positions. The benefits of uncertain tax positions are recorded in the Company's consolidated financial statements only after determining a more-likely-than-not probability that the uncertain tax positions will withstand challenge, if any, from tax authorities. When facts and circumstances change, the Company reassesses these probabilities and records any changes in the consolidated financial statements as appropriate. See Note 9 for additional information.

Net Income Attributable To Costco Per Common Share

Net Income Attributable to Costco per Common Share

The computation of basic net income per share uses the weighted average number of shares that were outstanding during the period. The computation of diluted net income per share uses the weighted average number of shares in the basic net income per share calculation plus the number of common shares that would be issued assuming exercise and vesting of all potentially dilutive common shares outstanding using the treasury stock method for shares subject to stock options and restricted stock units and the "if converted" method for the convertible note securities.

Stock Repurchase Programs

Stock Repurchase Programs

Repurchased shares of common stock are retired, in accordance with the Washington Business Corporation Act. The par value of repurchased shares is deducted from common stock and the excess repurchase price over par value is deducted from additional paid-in capital and retained earnings. See Note 6 for additional information.

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

As discussed above in Note 1, the Company adopted guidance related to consolidation of variable interest entities.

In October 2009, the FASB issued amended guidance on revenue recognition for multiple-deliverable revenue arrangements. Under this guidance, when vendor-specific objective evidence or third-party evidence for deliverables in an arrangement cannot be determined, a best estimate of the selling price is required to separate deliverables and allocate arrangement consideration using the relative selling-price method. This guidance also prescribes disclosure requirements on how the application of the relative selling price method affects the timing and amount of revenue recognition. The Company adopted this guidance at the beginning of its fiscal year 2011. The adoption of this standard did not have a material impact on the Company's consolidated financial statements.

In January 2010, the FASB issued guidance to amend the disclosure requirements related to recurring and nonrecurring fair value measurements. The guidance requires disclosure of transfers of assets and liabilities between Level 1 and Level 2 of the fair value measurement hierarchy, including the reasons and the timing of the transfers. Under Level 3 of the fair value measurement hierarchy, the guidance requires disclosure of information on purchases, sales, issuances, and settlements on a gross basis (as opposed to a net basis) in the reconciliation of the assets and liabilities measured. The Company adopted this guidance at the beginning of its third quarter of fiscal 2010, except for the Level 3 reconciliation disclosures on the roll-forward activities, which were adopted at the beginning of its third quarter of fiscal 2011. The adoption of this standard did not have a material impact on the Company's consolidated financial statement disclosures.

XML

Document And Entity Information (USD $)	12 Months Ended
	Aug. 28, 2011	Sep. 30, 2011	Feb. 11, 2011
Document And Entity Information
Document Type	10-K
Document Period End Date	Aug. 28, 2011
Amendment Flag	false
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	FY
Entity Registrant Name	COSTCO WHOLESALE CORP /NEW
Entity Central Index Key	0000909832
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Current Fiscal Year End Date	--08-28
Entity Filer Category	Large Accelerated Filer
Entity Well-known Seasoned Issuer	Yes
Entity Common Stock, Shares Outstanding		433,365,150
Entity Public Float			$ 32,525,998,477

XML

Debt (Narrative) (Details) (USD $)	12 Months Ended																	1 Months Ended	12 Months Ended
	Aug. 28, 2011 Maximum [Member] Short-term Borrowing [Member]	Aug. 29, 2010 Maximum [Member] Short-term Borrowing [Member]	Aug. 28, 2011 Minimum [Member] Short-term Borrowing [Member]	Aug. 29, 2010 Minimum [Member] Short-term Borrowing [Member]	Aug. 28, 2011 Short-term Borrowing [Member]	Aug. 29, 2010 Short-term Borrowing [Member]	Apr. 30, 2003 0.92% Semi-Annual Promissory Notes Due April 2010 [Member]	Aug. 28, 2011 Yen TIBOR Plus Margin Term Loan Due June 2018 [Member]	Aug. 29, 2010 Yen TIBOR Plus Margin Term Loan Due June 2018 [Member]	Jun. 30, 2008 Yen TIBOR Plus Margin Term Loan Due June 2018 [Member]	Aug. 28, 2011 2.695% Promissory Notes Due October 2017 [Member]	Oct. 31, 2007 2.695% Promissory Notes Due October 2017 [Member]	Aug. 28, 2011 5.3% Senior Notes Due March 2012 [Member]	Feb. 28, 2007 5.3% Senior Notes Due March 2012 [Member]	Aug. 28, 2011 5.5% Senior Notes Due March 2017 [Member]	Feb. 28, 2007 5.5% Senior Notes Due March 2017 [Member]	Feb. 28, 2007 5.3% Senior Notes Due March 2012 and 5.5% Senior Notes Due March 2017 [Member]	Aug. 31, 1997 3.5% Zero Coupon Convertible Subordinated Notes Due August 2017	Aug. 28, 2011 3.5% Zero Coupon Convertible Subordinated Notes Due August 2017
Line of credit facility, current borrowing capacity					$ 391,000,000	$ 341,000,000
Line of credit facility, amount outstanding					0	26,000,000
Line of credit facility interest rate	4.39%	3.63%	0.58%	0.61%
Face amount of debt issued														900,000,000		1,100,000,000		900,000,000
Loan interest rate, fixed							0.92%				2.695%	2.695%	5.30%	5.30%	5.50%	5.50%
Loan interest rate, basis spread on variable rate								0.35%		0.35%
Loan interest rate, variable								0.79%	0.84%
Debt instrument, principal due date							April 2010	June 2018		June 2018	October 2017	October 2017	March 2012	March 15, 2012	March 2017	March 15, 2017		August 2017	August 2017
Debt instrument, unamortized discount														2,000,000		6,000,000
Yield to maturity percentage																		3.50%	3.50%
Redemption price Company option																	100.00%
Redemption price certain events																	101.00%
Gross proceeds to company																		450,000,000
Notes convertible to number of shares, maximum																			878,000
Conversion price																		$ 22.71
Amount of notes converted																			$ 862,000,000

XML

Fair Value Measurement (Tables)

12 Months Ended

Aug. 28, 2011

Fair Value Measurement

Financial Assets And Liabilities Measured At Fair Value On A Recurring Basis

2011:	Level 1		Level 2
Money market mutual funds(1)	$	200	$	0
Investment in U.S. government and agency securities(3)		0		1,177
Investment in corporate notes and bonds		0		7
Investment in FDIC-insured corporate bonds		0		209
Investment in asset and mortgage-backed securities		0		12
Forward foreign-exchange contracts, in asset position(2)		0		1
Forward foreign-exchange contracts, in (liability) position(2)		0		(2	)
Total	$	200	$	1,404

2010:	Level 1		Level 2
Money market mutual funds(1)	$	1,514	$	0
Investment in U.S. government and agency securities		0		1,229
Investment in corporate notes and bonds		0		11
Investment in FDIC-insured corporate bonds		0		139
Investment in asset and mortgage-backed securities		0		23
Forward foreign-exchange contracts, in asset position(2)		0		1
Forward foreign-exchange contracts, in (liability) position(2)		0		(3	)
Total	$	1,514	$	1,400

(1) Included in cash and cash equivalents in the accompanying consolidated balance sheets.

(2) The asset and the liability values are included in deferred income taxes and other current assets and other current liabilities, respectively, in the accompanying consolidated balance sheets. See Note 1 for additional information on derivative instruments.

(3) $73 and $1,104 included in cash and cash equivalents and short-term investments, respectively, in the accompanying consolidated balance sheets.

XML

Fair Value Measurement (Financial Assets And Liabilities Measured At Fair Value On A Recurring Basis) (Details) (USD $) In Millions	Aug. 28, 2011		Aug. 29, 2010		Aug. 30, 2009	Aug. 31, 2008
Cash and cash equivalents	$ 4,009		$ 3,214		$ 3,157	$ 2,619
Short-term investments	1,604		1,535
Money Market Mutual Funds [Member] | Fair Value, Inputs, Level 1 [Member]
Fair value of assets measured on recurring basis	200	[1]	1,514	[1]
Money Market Mutual Funds [Member] | Fair Value, Inputs, Level 2 [Member]
Fair value of assets measured on recurring basis	0	[1]	0	[1]
U.S. Government and Agency Securities [Member]
Cash and cash equivalents	73
Short-term investments	1,104
U.S. Government and Agency Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Fair value of assets measured on recurring basis	0	[2]	0
U.S. Government and Agency Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Fair value of assets measured on recurring basis	1,177	[2]	1,229
Corporate Notes and Bonds [Member] | Fair Value, Inputs, Level 1 [Member]
Fair value of assets measured on recurring basis	0		0
Corporate Notes and Bonds [Member] | Fair Value, Inputs, Level 2 [Member]
Fair value of assets measured on recurring basis	7		11
FDIC Insured Corporate Bonds [Member] | Fair Value, Inputs, Level 1 [Member]
Fair value of assets measured on recurring basis	0		0
FDIC Insured Corporate Bonds [Member] | Fair Value, Inputs, Level 2 [Member]
Fair value of assets measured on recurring basis	209		139
Asset and Mortgage-Backed Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Fair value of assets measured on recurring basis	0		0
Asset and Mortgage-Backed Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Fair value of assets measured on recurring basis	12		23
Forward Foreign Exchange Contracts [Member] | Fair Value, Inputs, Level 1 [Member]
Fair value of assets measured on recurring basis	0	[3]	0	[3]
Fair value of liabilities measured on recurring basis	0	[3]	0	[3]
Forward Foreign Exchange Contracts [Member] | Fair Value, Inputs, Level 2 [Member]
Fair value of assets measured on recurring basis	1	[3]	1	[3]
Fair value of liabilities measured on recurring basis	(2)	[3]	(3)	[3]
Fair Value, Inputs, Level 1 [Member]
Fair value of assets measured on recurring basis	200		1,514
Fair Value, Inputs, Level 2 [Member]
Fair value of assets measured on recurring basis	$ 1,404		$ 1,400

[1] Included in cash and cash equivalents in the accompanying consolidated balance sheets.

[2] $73 and $1,104 included in cash and cash equivalents and short-term investments, respectively, in the accompanying consolidated balance sheets.

[3] The asset and the liability values are included in deferred income taxes and other current assets and other current liabilities, respectively, in the accompanying consolidated balance sheets. See Note 1 for additional information on derivative instruments.

XML

Segment Reporting (Segment Reporting Information, By Segment) (Details) (USD $) In Millions	3 Months Ended												12 Months Ended
	May 08, 2011		Feb. 13, 2011		Nov. 21, 2010		May 09, 2010	Feb. 14, 2010	Nov. 22, 2009	Aug. 28, 2011		Aug. 29, 2010	Aug. 28, 2011		Aug. 29, 2010	Aug. 30, 2009
Total revenue	$ 20,623	[1]	$ 20,875	[1]	$ 19,239	[1]	$ 17,780	$ 18,742	$ 17,299	$ 28,178	[1]	$ 24,125	$ 88,915	[1]	$ 77,946	$ 71,422
Operating income	556	[1]	596	[1]	525	[1]	491	470	428	762	[1]	688	2,439	[1]	2,077	1,777
Depreciation and amortization													855		795	728
Capital expenditures, net													1,290		1,055	1,250
Property and equipment, net										12,432		11,314	12,432		11,314	10,900
Total assets										26,761		23,815	26,761		23,815	21,979
United States Operations [Member]
Total revenue													64,904		59,624	56,548
Operating income													1,395		1,310	1,273
Depreciation and amortization													640		625	589
Capital expenditures, net													876		804	904
Property and equipment, net										8,870		8,709	8,870		8,709	8,415
Total assets										18,558		18,247	18,558		18,247	17,228
Canadian Operations [Member]
Total revenue													14,020		12,051	9,737
Operating income													621		547	354
Depreciation and amortization													117		107	90
Capital expenditures, net													144		162	135
Property and equipment, net										1,608		1,474	1,608		1,474	1,394
Total assets										3,741		3,147	3,741		3,147	2,641
Other International Operations [Member]
Total revenue													9,991		6,271	5,137
Operating income													423		220	150
Depreciation and amortization													98		63	49
Capital expenditures, net													270		89	211
Property and equipment, net										1,954		1,131	1,954		1,131	1,091
Total assets										$ 4,462		$ 2,421	$ 4,462		$ 2,421	$ 2,110

[1] As discussed in Note 1, the Company began consolidating Mexico on August 30, 2010.

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Debt

12 Months Ended

Aug. 28, 2011

Debt

Debt

Note 4—Debt

Bank Credit Facilities and Commercial Paper Programs

The Company enters into various short-term bank credit facilities. At the end of 2011 and 2010, the total amount of credit under these facilities was $391 and $341, respectively. The total amount outstanding was $26 at the end of 2010. There was nothing outstanding at the end of 2011. The various credit facilities provide for applicable interest rates ranging from 0.58% to 4.39% in 2011 and 0.61% to 3.63% in 2010.

Short-Term Borrowings

The weighted average borrowings, maximum borrowings, and weighted average interest rate under all short-term borrowing arrangements were as follows for 2011 and 2010:

Category of Aggregate Short-term Borrowings	Maximum Amount Outstanding During the Fiscal Year		Average Amount Outstanding During the Fiscal Year		Weighted Average Interest Rate During the Fiscal Year
Year ended August 28, 2011
Bank borrowings:
Canada	$	6	$	4		3.00	%
Japan		70		20		0.58
Bank overdraft facility:
United Kingdom		16		4		1.50
Year ended August 29, 2010
Bank borrowings:
Canada	$	1	$	1		2.75	%
Japan		64		39		0.63
Bank overdraft facility:
United Kingdom		5		2		1.50

Long-Term Debt

Long-term debt at the end of 2011 and 2010 consisted of the following:

	2011		2010
5.5% Senior Notes due March 2017	$	1,097	$	1,096
5.3% Senior Notes due March 2012		900		899
2.695% Promissory notes due October 2017		85		77
0.35% over Yen TIBOR (6-month) Term Loan due June 2018		39		35
3.5% Zero Coupon convertible subordinated notes due August 2017		31		32
Other long-term debt		1		2
Total long-term debt		2,153		2,141
Less current portion of 5.3% Senior Notes due March 2012		900		0
Long-term debt, excluding current portion	$	1,253	$	2,141

In April 2010, the Company's Japanese subsidiary paid the outstanding principal and interest balances related to the 0.92% promissory notes due April 2010, originally issued in April 2003.

In June 2008, the Company's Japanese subsidiary entered into a ten-year term loan with a variable rate of interest of Yen TIBOR (6-month) plus a 0.35% margin (0.79% and 0.84% at the end of 2011 and 2010, respectively) on the outstanding balance. Interest is payable semi-annually in December and June and principal is due in June 2018.

In October 2007, the Company's Japanese subsidiary issued promissory notes through a private placement, bearing interest at 2.695%. Interest is payable semi-annually, and principal is due in October 2017. The Company guarantees all financing instruments issued by its Japanese subsidiary.

In February 2007, the Company issued $900 of 5.3% Senior Notes due March 15, 2012 (2012 Notes) at a discount of $2 and $1,100 of 5.5% Senior Notes due March 15, 2017 (2017 Notes) at a discount of $6 (together the 2007 Senior Notes). Interest on the 2007 Senior Notes is payable semi-annually on March 15 and September 15 of each year. The discount and issuance costs associated with the Senior Notes are being amortized to interest expense over the terms of those notes. The Company, at its option, may redeem the 2007 Senior Notes at any time, in whole or in part, at a redemption price plus accrued interest. The redemption price is equal to the greater of 100% of the principal amount of the 2007 Senior Notes to be redeemed, or the sum of the present values of the remaining scheduled payments of principal and interest to maturity. Additionally, the Company will be required to make an offer to purchase the 2007 Senior Notes at a price of 101% of the principal amount plus accrued and unpaid interest to the date of repurchase, upon certain events as defined by the terms of the 2007 Senior Notes. In March 2011, the Company reclassified its 2012 Notes to a current liability within the current portion of long-term debt of the consolidated balance sheets to reflect its remaining maturity of less than one year.

In August 1997, the Company sold $900 principal amount at maturity 3.5% Zero Coupon Convertible Subordinated Notes (Zero Coupon Notes) due in August 2017. The Zero Coupon Notes were priced with a yield to maturity of 3.5%, resulting in gross proceeds to the Company of $450. The remaining Zero Coupon Notes outstanding are convertible into a maximum of 878,000 shares of Costco Common Stock shares at an initial conversion price of $22.71. Holders of the Zero Coupon Notes may require the Company to purchase the Zero Coupon Notes (at the discounted issue price plus accrued interest to date of purchase) in August 2012. The Company, at its option, may redeem the Zero Coupon Notes (at the discounted issue price plus accrued interest to date of redemption) any time after August 2002. As of August 28, 2011, $862 in principal amount of Zero Coupon Notes had been converted by note holders into shares of Costco Common Stock, of which the principal converted during 2011, 2010 and 2009 is detailed in the table below:

	2011		2010		2009
Principal converted during period	$	3	$	1	$	25
Principal converted, including the related debt discount	$	2	$	1	$	19
Shares issued upon conversion (000's)		65		18		562

The carrying value and estimated fair value of long-term debt consisted of the following at the end of 2011 and 2010:

	2011				2010
	Carrying Value		Fair Value		Carrying Value		Fair Value
2017 Notes	$	1,097	$	1,314	$	1,096	$	1,295
2012 Notes		900		924		899		961
Zero Coupon Notes		31		63		32		51
Other long-term debt		125		134		114		122
Total long-term debt		2,153		2,435		2,141		2,429
Less current portion		900		924		0		0
Long-term debt, excluding current portion	$	1,253	$	1,511	$	2,141	$	2,429

The estimated fair value of the zero coupon notes is based upon quoted market prices. All of the Company's other debt obligations are based upon quoted market prices of similar types of borrowing arrangements.

Maturities of long-term debt during the next five fiscal years and thereafter are as follows:

2012	$	900
2013		0
2014		0
2015		0
2016		0
Thereafter		1,253
Total	$	2,153

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Debt (Tables)

12 Months Ended

Aug. 28, 2011

Debt

Schedule Of Short-Term Debt

Category of Aggregate Short-term Borrowings	Maximum Amount Outstanding During the Fiscal Year		Average Amount Outstanding During the Fiscal Year		Weighted Average Interest Rate During the Fiscal Year
Year ended August 28, 2011
Bank borrowings:
Canada	$	6	$	4		3.00	%
Japan		70		20		0.58
Bank overdraft facility:
United Kingdom		16		4		1.50
Year ended August 29, 2010
Bank borrowings:
Canada	$	1	$	1		2.75	%
Japan		64		39		0.63
Bank overdraft facility:
United Kingdom		5		2		1.50

Schedule Of Long-Term Debt

	2011		2010
5.5% Senior Notes due March 2017	$	1,097	$	1,096
5.3% Senior Notes due March 2012		900		899
2.695% Promissory notes due October 2017		85		77
0.35% over Yen TIBOR (6-month) Term Loan due June 2018		39		35
3.5% Zero Coupon convertible subordinated notes due August 2017		31		32
Other long-term debt		1		2
Total long-term debt		2,153		2,141
Less current portion of 5.3% Senior Notes due March 2012		900		0
Long-term debt, excluding current portion	$	1,253	$	2,141

Schedule Of Principal Converted

	2011		2010		2009
Principal converted during period	$	3	$	1	$	25
Principal converted, including the related debt discount	$	2	$	1	$	19
Shares issued upon conversion (000's)		65		18		562

Fair Value Of Long-Term Debt

	2011				2010
	Carrying Value		Fair Value		Carrying Value		Fair Value
2017 Notes	$	1,097	$	1,314	$	1,096	$	1,295
2012 Notes		900		924		899		961
Zero Coupon Notes		31		63		32		51
Other long-term debt		125		134		114		122
Total long-term debt		2,153		2,435		2,141		2,429
Less current portion		900		924		0		0
Long-term debt, excluding current portion	$	1,253	$	1,511	$	2,141	$	2,429

Schedule Of Long-Term Debt Maturities

2012	$	900
2013		0
2014		0
2015		0
2016		0
Thereafter		1,253
Total	$	2,153

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Investments (Narrative) (Details) (USD $) In Millions	12 Months Ended
	Aug. 30, 2009
Investments
Other-than-temporary impairment loss on investments	$ 12

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Summary Of Significant Accounting Policies (Useful Life By Asset Category) (Details)	12 Months Ended
	Aug. 28, 2011 years
Building and Improvements [Member]
Property and equipment, useful life, minimum	5
Property and equipment, useful life, maximum	50
Equipment and Fixtures [Member]
Property and equipment, useful life, minimum	3
Property and equipment, useful life, maximum	20

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Investments (Tables)

12 Months Ended

Aug. 28, 2011

Investments

Available-For-Sale And Held-To-Maturity Investments

2011:	Cost Basis		Unrealized Gains		Unrealized Losses		Recorded Basis
Available-for-sale:
U.S. government and agency securities	$	1,096	$	8	$	0	$	1,104
Corporate notes and bonds		6		1		0		7
FDIC-insured corporate bonds		208		1		0		209
Asset and mortgage-backed securities		12		0		0		12
Total available-for-sale		1,322		10		0		1,332
Held-to-maturity:
Certificates of deposit		272						272
Total investments	$	1,594	$	10	$	0	$	1,604
2010:	Cost Basis		Unrealized Gains		Unrealized Losses		Recorded Basis
Available-for-sale:
U.S. government and agency securities	$	1,222	$	7	$	0	$	1,229
Corporate notes and bonds		10		1		0		11
FDIC-insured corporate bonds		139		0		0		139
Asset and mortgage-backed securities		23		0		0		23
Total available-for-sale		1,394		8		0		1,402
Held-to-maturity:
Certificates of deposit		133						133
Total investments	$	1,527	$	8	$	0	$	1,535

Proceeds And Gross Realized Gains (Losses) From Sales Of Available-For-Sale Securities

	2011		2010		2009
Proceeds	$	602	$	309	$	183
Realized gains		1		5		5
Realized losses		0		1		2

Maturities Of Securities Excluding Trading Securities

	Available-For-Sale				Held-To-Maturity
	Cost Basis		Fair Value		Cost Basis		Fair Value
Due in one year or less	$	890	$	892	$	272	$	272
Due after one year through five years		426		433		0		0
Due after five years		6		7		0		0
	$	1,322	$	1,332	$	272	$	272

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Income Taxes

12 Months Ended

Aug. 28, 2011

Income Taxes

Income Taxes

Note 9—Income Taxes

Income before income taxes is comprised of the following:

	2011		2010		2009
Domestic (including Puerto Rico)	$	1,526	$	1,426	$	1,426
Foreign		857		628		301
Total	$	2,383	$	2,054	$	1,727

The provisions for income taxes for 2011, 2010, and 2009 are as follows:

	2011			2010		2009
Federal:
Current	$	409		$	445	$	396
Deferred		74			1		67
Total federal		483			446		463
State:
Current		78			79		66
Deferred		14			5		12
Total state		92			84		78
Foreign:
Current		270			200		94
Deferred		(4	)		1		(7	)
Total foreign		266			201		87
Total provision for income taxes	$	841		$	731	$	628

Tax benefits associated with the exercise of employee stock options and other employee stock programs were allocated directly to equity attributable to Costco in the amount of $59, $15, and $2, in 2011, 2010, and 2009, respectively.

The reconciliation between the statutory tax rate and the effective rate for 2011, 2010, and 2009 is as follows:

	2011					2010					2009
Federal taxes at statutory rate	$	834		35.0	%	$	718		35.0	%	$	604		35.0	%
State taxes, net		55		2.4			56		2.7			48		2.8
Foreign taxes, net		(66	)	(2.8	)		(38	)	(1.9	)		(24	)	(1.4	)
Other		18		0.7			(5	)	(0.2	)		0		0
Total	$	841		35.3	%	$	731		35.6	%	$	628		36.4	%

The components of the deferred tax assets and liabilities are as follows:

	2011		2010
Equity compensation	$	89	$	112
Deferred income/membership fees		134		118
Accrued liabilities and reserves		429		392
Other		32		35
Total deferred tax assets		684		657
Property and equipment		494		414
Merchandise inventories		164		170
Total deferred tax liabilities		658		584
Net deferred tax assets	$	26	$	73

The deferred tax accounts at the end of 2011 and 2010 include current deferred income tax assets of $360 and $307, respectively, included in deferred income taxes and other current assets; non-current deferred income tax assets of $53 and $10, respectively, included in other assets; and non-current deferred income tax liabilities of $387 and $244, respectively, included in deferred income taxes and other liabilities.

The Company has not provided for U.S. deferred taxes on cumulative undistributed earnings of certain non-U.S. consolidated subsidiaries, aggregating to $2,646 and $1,972 at the end of 2011 and 2010, respectively, as such earnings are deemed by the Company to be indefinitely reinvested. Because of the availability of U.S. foreign tax credits and complexity of the computation, it is not practicable to determine the U.S. federal income tax liability or benefit that would be associated with such earnings if such earnings were not deemed to be indefinitely reinvested.

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits for 2011 and 2010 is as follows:

	2011			2010
Gross unrecognized tax benefit at beginning of year	$	83		$	80
Gross increases—current year tax positions		21			29
Gross increases—tax positions in prior years		10			4
Gross decreases—tax positions in prior years		(6	)		(1	)
Settlements		(1	)		(27	)
Lapse of statute of limitations		(1	)		(2	)
Gross unrecognized tax benefit at end of year	$	106		$	83

Included in the balance at the end of 2011, are $64 of tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. Because of the impact of deferred tax accounting, other than interest and penalties, the disallowance of these tax positions would not affect the annual effective tax rate but would accelerate the payment of cash to the taxing authority to an earlier period.

The total amount of unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in future periods is $34 and $27 at the end of 2011 and 2010, respectively.

Accrued interest and penalties related to income tax matters are classified as a component of income tax expense. The Company recognized $2 of expense and $7 of income related to interest and penalties in 2011 and 2010, respectively. Accrued interest and penalties are $12 and $9 at the end of 2011 and 2010, respectively.

The Company is currently under audit by several taxing jurisdictions in the United States and in several foreign countries. Some audits may conclude in the next 12 months and the unrecognized tax benefits we have recorded in relation to the audits may differ from actual settlement amounts. It is not possible to estimate the effect, if any, of any amount of such change during the next 12 months to previously recorded uncertain tax positions in connection with the audits. The Company does not anticipate that there will be a material increase or decrease in the total amount of unrecognized tax benefits in the next 12 months.

The Company files income tax returns in the United States, various state and local jurisdictions, in Canada and in several other foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state or local examination for years before fiscal 2007. The Company is currently subject to examination in Canada for fiscal years 2006 to present and in California for fiscal years 2004 to present. No other examinations are believed to be material.

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Consolidated Statements Of Cash Flows (Parenthetical) (USD $) In Millions	12 Months Ended
	Aug. 28, 2011	Aug. 29, 2010	Aug. 30, 2009
Consolidated Statements Of Cash Flows
Interest capitalized	$ 9	$ 11	$ 8

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Summary Of Significant Accounting Policies (Narrative) (Details) (USD $)	3 Months Ended			12 Months Ended
	May 08, 2011	Feb. 13, 2011	Aug. 28, 2011	Aug. 28, 2011	Aug. 29, 2010	Aug. 30, 2009
Initial consolidation of noncontrolling interest in the Costco Mexico joint ventures				$ 357,000,000	$ 357,000,000
Credit and debit card receivables			982,000,000	982,000,000	862,000,000
Charge (benefit) to merchandise costs	49,000,000	6,000,000	32,000,000	87,000,000		32,000,000
Percent of warehouses under fixed-price contracts with counterparties				36.00%
Increase to total assets and liabilities due to consolidation				3.00%
Impairment charges				1,000,000	2,000,000	11,000,000
Equity in earnings of Costco, Mexico					41,000,000	32,000,000
Undistributed earnings of Mexico					307,000,000
Impairment of goodwill				0
Excess of outstanding checks over cash on deposit			108,000,000	108,000,000	617,000,000
Estimated accruals for insurance liabilities			595,000,000	595,000,000	541,000,000
Reserve for closing costs			5,000,000	5,000,000	5,000,000
Gain (losses) on foreign currency transaction				8,000,000	13,000,000
Reward rate				2.00%
Maximum reward rebate amount per customer, yearly				500
Reduction in sales				790,000,000	688,000,000	610,000,000
Capital leases for warehouse locations			4	4
Operating Lease [Member]
Year leases expire				2051
Operating Lease [Member] | United Kingdom [Member]
Year leases expire				2151
Capital Lease [Member]
Year leases expire				2040
Consolidated [Member]
Number of warehouses operated				592
U. S. And Puerto Rico [Member]
Number of regions in country				40
Number of warehouses operated				429
Canada [Member]
Number of regions in country				9
Number of warehouses operated				82
United Kingdom [Member]
Number of warehouses operated				22
Japan [Member]
Number of warehouses operated				9
Korea [Member]
Number of warehouses operated				7
Taiwan [Member]
Number of warehouses operated				8
Australia [Member]
Number of warehouses operated				3
Mexico [Member]
Number of warehouses operated				32
Forward Foreign Exchange Contracts [Member]
Notional amount of foreign exchange derivatives			$ 247,000,000	$ 247,000,000	$ 225,000,000

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Stockholders' Equity

12 Months Ended

Aug. 28, 2011

Stockholders' Equity

Stockholders' Equity

Note 6—Stockholders' Equity

Dividends

The Company's current quarterly dividend rate is $0.24 per share.

Stock Repurchase Programs

The Company's stock repurchase activity during 2011, 2010, and 2009 is summarized in the following table:

	Shares Repurchased (000's)		Average Price per Share		Total Cost
2011		8,939	$	71.74	$	641
2010		9,943		57.14		568
2009		895		63.84		57

These amounts differ from the stock repurchase balances in the consolidated statements of cash flows to the extent that repurchases had not settled at the end of the fiscal year. Purchases are made from time-to-time, as conditions warrant, in the open market or in block purchases, and pursuant to share repurchase plans under SEC Rule 10b5-1. Repurchased shares are retired.

Amounts remaining under stock repurchase authorizations of the Board of Directors at the end of 2011 are detailed below:

Date Authorized	Amount Authorized		Amount Repurchased		Amount Remaining
Prior to November 2007	$	4,800	$	4,800	$	0
November 2007 (expired in November 2010)(1)		1,000		705		0
July 2008 (expired in July 2011)(2)		1,000		208		0
April 2011 (expires April 2015)		4,000		294		3,706
Total	$	10,800	$	6,007	$	3,706

(1) In November 2010, $295 of the November 2007 authorization expired having been unused by the Company.

(2) In April 2011, $792 of the July 2008 authorization was cancelled and replaced by the Board of Directors upon authorization of the April 2011 stock repurchase program.

Accumulated Other Comprehensive Income

The components of accumulated other comprehensive income, net of tax where applicable, were as follows:

	2011		2010
Unrealized gains on short-term investments	$	7	$	6
Foreign-currency translation adjustment and other		366		116
Accumulated other comprehensive income	$	373	$	122

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Commitments And Contingencies

12 Months Ended

Aug. 28, 2011

Commitments And Contingencies

Commitments And Contingencies

Note 11—Commitments and Contingencies

Legal Proceedings

The Company is involved from time to time in claims, proceedings and litigation arising from its business and property ownership. The Company is a defendant in the following matters, among others:

A class action was filed on May 15, 2009, on behalf of present and former hourly employees in California, in which the plaintiff principally alleges that the Company's routine closing procedures and security checks cause employees to incur delays that qualify as uncompensated working time. Mary Pytelewski v. Costco Wholesale Corp., Superior Court for the County of San Diego, Case No. 37-2009-00089654. The case was removed to the United States District Court, Southern District of California (San Diego), Case No. 09-CV-02473-AJB (BGS). On December 14, 2010, the court certified two classes of hourly non-exempt employees subject to the Company's closing lockdown procedures: one under California law for California non-union employees who were subject to the closing procedures between May 15, 2005, and October 1, 2009; and a nationwide class under federal law for full-time employees who were subject to the closing procedures between March 1, 2008, and October 1, 2009. The case has been renamed Eric Stiller v. Costco Wholesale Corp. and the parties are conducting discovery. A similar class action was filed on November 20, 2009, in the State of Washington. Raven Hawk v. Costco Wholesale Corp., King County Superior Court, Case No. 09-242196-0-SEA. On December 3, 2010, the court granted in part plaintiff's motion for class certification; the class certified consists of people employed in Washington state warehouses from November 2006 through November 2009 who had clocked out and were detained during closing procedures without compensation. Trial has been scheduled for February 13, 2012.

On July 14, 2010, a putative class action was filed alleging that the Company unlawfully failed to pay overtime compensation, denied meal and rest breaks, failed to pay minimum wages, failed to provide accurate wage-itemization statements, and willfully failed to pay termination wages allegedly resulting from misclassification of certain California department managers as exempt employees. On September 3, 2010, the Company removed the case to federal court. The court remanded the action, and the Company's petition to the Ninth Circuit for permission to appeal the remand order was denied. On June 24, 2011, defendants filed a motion to strike the class and certain other allegations from the complaint. On July 26, 2011, the court granted the motion in part, without leave to amend, striking allegations predating December 31, 2008, which are covered by a prior class settlement. The Court also granted the motion with respect to allegations post-dating December 31, 2008, but granted plaintiff leave to amend. On August 25, 2011, plaintiff filed an amended complaint, and on September 20, 2011, defendants renewed the motion to strike. The motion is set for hearing on October 13, 2011. Manuel Medrano v. Costco Wholesale Corp., and Costco Wholesale Membership, Inc., Superior Court of California (Los Angeles), Case No. BC441597.

In Velazquez v. Costco, filed April 4, 2011, now pending in U.S. District Court for the Central District of California, Case No. CV11-00508 JVS (RNBx), three former California Receiving Managers seek class treatment for their claim that Costco misclassified California Receiving Managers as exempt. On October 11, 2011, the court denied plantiffs' motion for class certification.

On May 12, 2011, a putative class action was filed on behalf of California employees alleging that the Company failed to provide its cashiers with seats, in violation of California law. The complaint also alluded to purported overtime violations and missed meal periods and rest breaks. On August 10, 2011, the Company removed the case to federal court. On August, 17, 2011, the Company filed a motion to dismiss the class action complaint. On August 30, 2011, the plaintiff voluntarily dismissed the case, and a dismissal without prejudice was entered. Suzanne Justice v. Costco Wholesale Corp., United States District Court (Los Angeles), Case No. LACV11-6563-ODW (JEMx).

Claims in the above actions (other than Hawk) are made under various provisions of the California Labor Code and the California Business and Professions Code. Plaintiffs seek restitution/disgorgement, compensatory damages, various statutory penalties, punitive damages, interest, and attorneys' fees.

A case brought as a class action on behalf of certain present and former female managers, in which plaintiffs allege denial of promotion based on gender in violation of Title VII of the Civil Rights Act of 1964 and California state law. Shirley "Rae" Ellis v. Costco Wholesale Corp., United States District Court (San Francisco), Case No. C-04-3341-MHP. Plaintiffs seek compensatory damages, punitive damages, injunctive relief, interest and attorneys' fees. Class certification was granted by the district court on January 11, 2007. On September 16, 2011, the United States Court of Appeals for the Ninth Circuit reversed the order of class certification and remanded to the district court for further proceedings.

Class actions stated to have been brought on behalf of certain present and former Costco members:

Numerous putative class actions have been brought around the United States against motor fuel retailers, including the Company, alleging that they have been overcharging consumers by selling gasoline or diesel that is warmer than 60 degrees without adjusting the volume sold to compensate for heat-related expansion or disclosing the effect of such expansion on the energy equivalent received by the consumer. The Company is named in the following actions: Raphael Sagalyn, et al., v. Chevron USA, Inc., et al., Case No. 07-430 (D. Md.); Phyllis Lerner, et al., v. Costco Wholesale Corporation, et al., Case No. 07-1216 (C.D. Cal.); Linda A. Williams, et al., v. BP Corporation North America, Inc., et al., Case No. 07-179 (M.D. Ala.); James Graham, et al. v. Chevron USA, Inc., et al., Civil Action No. 07-193 (E.D. Va.); Betty A. Delgado, et al., v. Allsups, Convenience Stores, Inc., et al., Case No. 07-202 (D.N.M.); Gary Kohut, et al. v. Chevron USA, Inc., et al., Case No. 07-285 (D. Nev.); Mark Rushing, et al., v. Alon USA, Inc., et al., Case No. 06-7621 (N.D. Cal.); James Vanderbilt, et al., v. BP Corporation North America, Inc., et al., Case No. 06-1052 (W.D. Mo.); Zachary Wilson, et al., v. Ampride, Inc., et al., Case No. 06-2582 (D. Kan.); Diane Foster, et al., v. BP North America Petroleum, Inc., et al., Case No. 07-02059 (W.D. Tenn.); Mara Redstone, et al., v. Chevron USA, Inc., et al., Case No. 07-20751 (S.D. Fla.); Fred Aguirre, et al. v. BP West Coast Products LLC, et al., Case No. 07-1534 (N.D. Cal.); J.C. Wash, et al., v. Chevron USA, Inc., et al.; Case No. 4:07cv37 (E.D. Mo.); Jonathan Charles Conlin, et al., v. Chevron USA, Inc., et al.; Case No. 07 0317 (M.D. Tenn.); William Barker, et al. v. Chevron USA, Inc., et al.; Case No. 07-cv-00293 (D.N.M.); Melissa J. Couch, et al. v. BP Products North America, Inc., et al., Case No. 07cv291 (E.D. Tex.); S. Garrett Cook, Jr., et al., v. Hess Corporation, et al., Case No. 07cv750 (M.D. Ala.); Jeff Jenkins, et al. v. Amoco Oil Company, et al., Case No. 07-cv-00661 (D. Utah); and Mark Wyatt, et al., v. B. P. America Corp., et al., Case No. 07-1754 (S.D. Cal.). On June 18, 2007, the Judicial Panel on Multidistrict Litigation assigned the action, entitled In re Motor Fuel Temperature Sales Practices Litigation, MDL Docket No 1840, to Judge Kathryn Vratil in the United States District Court for the District of Kansas. On February 21, 2008, the court denied a motion to dismiss the consolidated amended complaint. On April 12, 2009, the Company agreed to a settlement involving the actions in which it is named as a defendant. Under the settlement, which is subject to final approval by the court, the Company agreed, to the extent allowed by law, to install over five years from the effective date of the settlement temperature-correcting dispensers in the States of Alabama, Arizona, California, Florida, Georgia, Kentucky, Nevada, New Mexico, North Carolina, South Carolina, Tennessee, Texas, Utah, and Virginia. Other than payments to class representatives, the settlement does not provide for cash payments to class members. On August 18, 2009, the court preliminarily approved the settlement. On August 13, 2010, the court denied plaintiffs' motion for final approval of the settlement. On February 3, 2011, a revised settlement agreement was submitted for court approval. On September 22, 2011, the court preliminarily approved the revised settlement.

The Company has been named as a defendant in two purported class actions relating to sales of organic milk. Hesse v. Costco Wholesale Corp., No. C07-1975 (W.D. Wash.); Snell v. Aurora Dairy Corp., et al., No. 07-CV-2449 (D. Col.). Both actions claim violations of the laws of various states, essentially alleging that milk provided to Costco by its supplier Aurora Dairy Corp. was improperly labeled "organic." Plaintiffs filed a consolidated complaint on July 18, 2008. With respect to the Company, plaintiffs seek to certify four classes of people who purchased Costco organic milk. Aurora has maintained that it has held and continues to hold valid organic certifications. The consolidated complaint seeks, among other things, actual, compensatory, statutory, punitive and/or exemplary damages in unspecified amounts, as well as costs and attorneys' fees. On June 3, 2009, the district court entered an order dismissing with prejudice, among others, all claims against the Company. As a result of an appeal by the plaintiffs, on September 15, 2010, the court of appeals affirmed in part and reversed in part the rulings of the district court and remanded the matter for further proceedings. Plaintiffs have filed amended complaints.

In Verzani, et ano., v. Costco Wholesale Corp., No. 09 CV 2117 (United States District Court for the Southern District of New York), a purported nationwide class action, the plaintiffs allege claims for breach of contract and violation of the Washington Consumer Protection Act, based on the failure of the Company to disclose on the label of its "Shrimp Tray with Cocktail Sauce" the weight of the shrimp in the item as distinct from the accompanying cocktail sauce, lettuce, and lemon wedges. The complaint seeks various forms of damages (including compensatory and treble damages and disgorgement and restitution), injunctive and declaratory relief, attorneys' fees, costs, and prejudgment interest. On April 21, 2009, the plaintiff filed a motion for a preliminary injunction, seeking to prevent the Company from selling the shrimp tray unless the Company separately discloses the weight of the shrimp and provides shrimp consistent with the disclosed weight. By orders dated July 29 and August 6, 2009, the court denied the preliminary injunction motion and dismissed the claim for breach of contract, and on July 21, 2010, the court of appeals summarily affirmed these rulings. On September 28, 2010, the district court denied the motion of one plaintiff to file an amended complaint. On September 20, 2011, the court of appeals affirmed the rulings of the district court.

In Kilano, et. ano, v. Costco Wholesale Corp., No. 2:10-cv-11456-VAR-DAS (United States District Court for the Eastern District of Michigan), filed on April 12, 2010, a purported class action was filed on behalf of certain Michigan Executive level-members who received 2% rewards. Plaintiffs allege that the Company "guarantees" that the member will receive rewards of no less than the fifty dollar difference between Executive and Gold Star membership and that the Company is required to but has failed to automatically reimburse members whose rewards are less than this difference. Plaintiffs allege violations of the Michigan Consumer Protection Act, breach of contract, and unjust enrichment. They seek compensatory and statutory damages, injunctive relief, costs, and attorneys' fees. The Company filed an answer denying the material allegations of the complaint. On April 5, 2011, the court denied plaintiff's motion for class certification. On July 22, 2011, plaintiffs sought leave to file an amended complaint.

On March 15, 2011, Robles, et al., v. Costco Wholesale Corporation was filed as a purported class action in the United States District Court for the Northern District of Illinois, Case No. 11-CV-1785. Plaintiffs seek to represent a class composed of all disabled persons with ambulatory impairments who depend upon the use of a wheelchair and are allegedly unable to obtain optometry services at the Company. Plaintiffs allege that the Company has failed to remove architectural barriers that prevent full and equal enjoyment of and access to its eye examination services. They allege violations of Title III of the Americans with Disabilities Act and the Rehabilitation Act of 1973. They seek injunctive relief and compensatory damages, costs, and attorneys' fees. The Company has filed an answer denying the material allegations of the complaint.

Three shareholder derivative lawsuits were filed, ostensibly on behalf of the Company, against certain of its current and former officers and directors, relating to the Company's stock option grants. One suit, Sandra Donnelly v. James Sinegal, et al., Case No. 08-2-23783-4 SEA (King County Superior Court), was filed in Washington state court on or about July 17, 2008. Plaintiff alleged, among other things, that individual defendants breached their fiduciary duties to the Company by "backdating" grants of stock options issued between 1997 and 2005 to various current and former executives, allegedly in violation of the Company's shareholder-approved stock option plans. On April 3, 2009, on the Company's motion the court dismissed the action, following the plaintiff's disclosure that she had ceased to own Costco common stock, a requirement for her to pursue a derivative action. The second action, Pirelli Armstrong Tire Corp. Retiree Medical Benefits Trust v. James Sinegal, et al., Case No. 2:08-cv-01450-TSZ (United States District Court for the Western District of Washington), was filed on or about September 29, 2008, and named as defendants all but one of the Company's directors and certain of its senior executives. Plaintiff alleged that defendants approved the issuance of backdated stock options, concealed the backdating of stock options, and refused to vindicate the Company's rights by pursuing those who obtained improper incentive compensation. The third action, Daniel Buckfire v. James D. Sinegal, et al., No. 2:09-cv-00893-TSZ (United States District Court for the Western District of Washington), was filed on or about June 29, 2009, and contains allegations substantially similar to those in the Pirelli action. On August 12, 2009, the court entered an order consolidating the Pirelli and Buckfire actions. On October 2, 2009, plaintiffs Pirelli and Buckfire filed a consolidated amended complaint. On November 16, 2009, the defendants filed motions to dismiss the amended complaint on various grounds, including that plaintiffs failed to properly allege why a pre-suit demand had not been made on the Board of Directors. On September 20, 2010, a special committee of the Board of Directors of the Company approved an agreement in principle with the plaintiffs that would terminate the litigation. The agreement, which was subject among other things to federal district court approval, provided that the Company will pay an amount not to exceed $4.85 million in attorneys' fees to plaintiffs' counsel and will adopt or maintain certain governance, control and other process changes. On December 20, 2010, the parties executed a stipulation of settlement, and on January 14, 2011, plaintiffs filed a motion for court approval of the settlement. On February 28, 2011, the court entered an order that preliminarily approved, subject to further consideration at a settlement hearing, the proposed settlement of the action involving, among other things, a dismissal of the consolidated derivative actions with prejudice. On June 10, 2011, the court granted final approval to the settlement, and the case has been dismissed.

On October 4, 2006, the Company received a grand jury subpoena from the United States Attorney's Office for the Central District of California, seeking records relating to the Company's receipt and handling of hazardous merchandise returned by Costco members and other records. The Company has entered into a tolling agreement with the United States Attorney's Office.

The Environmental Protection Agency (EPA) issued an Information Request to the Company, dated November 1, 2007, under the Clean Air Act. The EPA sought records regarding warehouses in the states of Arizona, California, Hawaii, and Nevada relating to compliance with regulations concerning air-conditioning and refrigeration equipment. On March 4, 2009, the Company was advised by the Department of Justice that the Department was prepared to allege that the Company has committed at least nineteen violations of the leak-repair requirements of 40 C.F.R. § 82.156(i) and at least seventy-four violations of the recordkeeping requirements of 40 C.F.R. § 82.166(k), (m) at warehouses in these four states. The Company has responded to these allegations, is engaged in communications with the Department about these and additional allegations made by letter dated September 10, 2009, and has entered into tolling agreements. Substantial penalties may be levied for violations of the Clean Air Act. The Company is cooperating with this inquiry.

On October 7, 2009, the District Attorneys for San Diego, San Joaquin and Solano Counties filed a complaint, People of the State of California v. Costco Wholesale Corp., et al, No. 37-2009-00099912 (Superior Court for the County of San Diego), alleging on information and belief that the Company has violated and continues to violate provisions of the California Health and Safety Code and the Business and Professions Code through the use of certain spill clean-up materials at its gasoline stations. Relief sought includes, among other things, requests for preliminary and permanent injunctive relief, civil penalties, costs and attorneys' fees. On September 2, 2010, the court dismissed the complaint without prejudice. An amended complaint was filed on September 13, 2010.

The Company has received notices from most states stating that they have appointed an agent to conduct an examination of the books and records of the Company to determine whether it has complied with state unclaimed property laws. In addition to seeking the turnover of unclaimed property subject to escheat laws, the states may seek interest, penalties, costs of examinations, and other relief. The State of Washington conducted such an examination on its own behalf and on February 4, 2011 issued an assessment. The Company filed suit on March 4, 2011, to contest the assessment.

Except where indicated otherwise above, a reasonable estimate of the possible loss or range of loss cannot be made at this time for the matters described. The Company does not believe that any pending claim, proceeding or litigation, either alone or in the aggregate, will have a material adverse effect on the Company's financial position; however, it is possible that an unfavorable outcome of some or all of the matters, however unlikely, could result in a charge that might be material to the results of an individual fiscal quarter.

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Income Taxes (Components Of Deferred Tax Assets And Liabilities) (Details) (USD $) In Millions	Aug. 28, 2011	Aug. 29, 2010
Income Taxes
Equity compensation	$ 89	$ 112
Deferred income / membership fees	134	118
Accrued liabilities and reserves	429	392
Other	32	35
Total deferred tax assets	684	657
Property and equipment	494	414
Merchandise inventories	164	170
Total deferred tax liabilities	658	584
Net deferred tax assets	$ 26	$ 73

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Stock-Based Compensation Plans

12 Months Ended

Aug. 28, 2011

Stock-Based Compensation Plans

Stock-Based Compensation Plans

Note 7—Stock-Based Compensation Plans

Through the first quarter of fiscal 2006, the Company granted stock options under the Amended and Restated 2002 Stock Incentive Plan (Second Restated 2002 Plan) and predecessor plans. Since the fourth quarter of fiscal 2006, the Company has granted RSUs under the Second Restated 2002 Plan. In July 2008 the Third Restated 2002 Plan was amended by the Board of Directors (Fourth Restated 2002 Plan). Under the Fourth Restated 2002 Plan, prospective grants of RSUs are subject, upon certain terminations of employment, to quarterly, as opposed to daily vesting. Previously awarded RSU grants continue to involve daily vesting upon certain terminations of employment. Additionally, employees who attain certain years of service with the Company will receive shares under accelerated vesting provisions on the annual vesting date rather than upon qualified retirement. The first grant impacted by these amendments occurred in the first quarter of fiscal 2009. In the second quarter of fiscal 2010, the Fourth Restated 2002 Plan was amended following shareholder approval and is now referred to as the Fifth Restated 2002 Stock Incentive Plan (Fifth Restated 2002 Plan). The Fifth Restated 2002 Plan authorizes the issuance of an additional 18,000,000 shares (10,285,714 RSUs) of common stock for future grants in addition to grants currently authorized. Each share issued in respect of stock bonuses or stock units is counted as 1.75 shares toward the limit of shares available. The Company issues new shares of common stock upon exercise of stock options and vesting of RSUs.

Summary of Stock Option Activity

The following table summarizes stock option transactions during 2011:

	Number Of Options (in 000's)			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value(1)
Outstanding at the end of 2010		13,162		$	39.50
Exercised		(7,245	)		39.03
Outstanding and exercisable at the end of 2011		5,917		$	40.07		2.77	$	220

(1) The difference between the exercise price and market value of common stock at August 28, 2011.

The following is a summary of stock options outstanding at the end of 2011:

	Options Outstanding and Exercisable
Range of Prices	Number of Options (in 000's)		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price
$30.41–$37.35		2,446		2.19	$	35.38
$37.44–$42.41		481		0.67		39.05
$43.79–$43.79		2,649		3.59		43.79
$45.99–$46.46		341		3.58		46.19
		5,917		2.77	$	40.07

Options exercisable and the weighted average exercise price at the end of 2010 and 2009:

	2010		2009
Options exercisable (shares in 000's)		13,032		16,588
Weighted average exercise price	$	39.43	$	39.62

The tax benefits realized and intrinsic value related to total stock options exercised during 2011, 2010, and 2009 are provided in the following table:

	2011		2010		2009
Actual tax benefit realized for stock options exercised	$	78	$	34	$	10
Intrinsic value of stock options exercised(1)	$	227	$	98	$	27

(1) The difference between the exercise price and market value of common stock measured at each individual exercise date.

Employee Tax Consequences on Certain Stock Options

In 2010, the Company recorded a non-recurring benefit of $24 to selling, general and administrative expense related to a refund of a previously recorded Canadian employee tax liability.

Summary of Restricted Stock Unit Activity

RSUs granted to employees and to non-employee directors generally vest over five years and three years, respectively; however, the Company provides for accelerated vesting for employees that have attained twenty-five or more years of service with the Company. Recipients are not entitled to vote or receive dividends on unvested shares. At the end of 2011, 8,565,000 shares were available to be granted as RSUs to eligible employees and directors under the Fifth Restated 2002 Plan.

The following awards were outstanding at the end of 2011:

• 9,010,000 shares of time-based RSUs that vest upon continued employment over specified periods of time; and

• 717,000 performance-based RSUs, of which 315,000 will be formally granted to certain executive officers of the Company upon the official certification of the attainment of specified performance targets for 2011. Once formally granted, the restrictions lapse upon continued employment over specified periods of time.

The following table summarizes RSU transactions during 2011:

	Number of Units (in 000's)			Weighted-Average Grant Date Fair Value
Non-vested at the end of 2010		9,253		$	55.22
Granted		3,971			61.27
Vested		(3,322	)		55.55
Forfeited		(175	)		55.90
Non-vested at the end of 2011		9,727		$	57.56

Summary of Stock-Based Compensation

The following table summarizes stock-based compensation expense and the related tax benefits under the Company's plans:

	2011		2010		2009
Restricted stock units	$	206	$	171	$	132
Stock options		1		19		49
Total stock-based compensation expense before income taxes		207		190		181
Less recognized income tax benefit		67		63		60
Total stock-based compensation expense, net of income taxes	$	140	$	127	$	121

The remaining unrecognized compensation cost related to non-vested RSUs at August 28, 2011 was $386 and the weighted-average period of time over which this cost will be recognized is 1.6 years.

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Net Income Per Common And Common Equivalent Share (Tables)

12 Months Ended

Aug. 28, 2011

Net Income Per Common And Common Equivalent Share

Schedule Of Earnings Per Share Effect On Income And Weighted Average Number Of Dilutive Potential Common Stock

	2011		2010		2009
Net income available to common stockholders used in basic net income per common share	$	1,462	$	1,303	$	1,086
Interest on convertible notes, net of tax		1		1		1
Net income available to common stockholders after assumed conversions of dilutive securities	$	1,463	$	1,304	$	1,087
Weighted average number of common shares used in basic net income per common share		436,119		438,611		433,988
Stock options and RSUs		6,063		6,409		5,072
Conversion of convertible notes		912		950		1,394
Weighted number of common shares and dilutive potential of common stock used in diluted net income per share		443,094		445,970		440,454
Anti-dilutive stock options and RSUs		0		1,141		8,045

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Leases

12 Months Ended

Aug. 28, 2011

Leases

Leases

Note 5—Leases

Operating Leases

The aggregate rental expense and sublease income related to certain of its operating lease arrangements, for 2011, 2010 and 2009 are as follows:

	Aggregate rental expense		Sublease income(1)
2011	$	208	$	10
2010		187		10
2009		177		10

(1) Included in interest income and other, net

Contingent rents are not material.

Capital Leases

Gross assets recorded under these leases were $170 and $169, at the end of 2011 and 2010, respectively. These assets are recorded net of accumulated amortization of $13 and $7 at the end of 2011 and 2010, respectively.

Future minimum payments, net of sub-lease income of $183 for all years combined, during the next five fiscal years and thereafter under non-cancelable operating leases with terms of at least one year and capital leases, at the end of 2011, were as follows:

	Operating leases		Capital lease obligations
2012	$	183	$	13
2013		182		13
2014		175		13
2015		162		13
2016		155		13
Thereafter		1,850		311
Total	$	2,707		376
Less amount representing interest				(207	)
Net present value of minimum lease payment				169
Less current installments(1)				(3	)
Long-term capital lease obligations less current installments(2)			$	166

(1) Included in other current liabilities.

(2) Included in deferred income taxes and other liabilities.

Certain leases may require the Company to incur costs to return leased property to its original condition, such as the removal of gas tanks. Estimated asset retirement obligations associated with these leases, which amounted to $31 and $26 at the end of 2011 and 2010, respectively, are recorded and included in deferred income taxes and other liabilities on the consolidated balance sheets.

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Debt (Fair Value Of Long-Term Debt) (Details) (USD $) In Millions	Aug. 28, 2011	Aug. 29, 2010
Total long-term debt, Carrying Value	$ 2,153	$ 2,141
Total long-term debt, Fair Value	2,435	2,429
Less current portion, Carrying Value	900	0
Less current portion, Fair Value	924	0
Long-term debt, excluding current portion, Carrying Value	1,253	2,141
Long-term debt, excluding current portion, Fair Value	1,511	2,429
2017 Notes [Member]
Fair Value	1,314	1,295
Total long-term debt, Carrying Value	1,097	1,096
2012 Notes [Member]
Fair Value	924	961
Total long-term debt, Carrying Value	900	899
Zero Coupon Notes [Member]
Fair Value	63	51
Total long-term debt, Carrying Value	31	32
Other Long-Term Debt [Member]
Fair Value	134	122
Other long-term debt, Carrying Value	125	114
Total long-term debt, Carrying Value	$ 1	$ 2

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Consolidated Statements Of Equity And Comprehensive Income (Parenthetical) (USD $) In Millions	12 Months Ended
	Aug. 28, 2011	Aug. 29, 2010	Aug. 30, 2009
Consolidated Statements Of Equity And Comprehensive Income
Unrealized gain on short-term investments, tax	$ 1	$ 1	$ 2

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Summary Of Significant Accounting Policies

12 Months Ended

Aug. 28, 2011

Summary Of Significant Accounting Policies

Summary Of Significant Accounting Policies

Note 1—Summary of Significant Accounting Policies

Basis of Presentation

The consolidated financial statements include the accounts of Costco Wholesale Corporation, a Washington corporation, its wholly-owned subsidiaries, subsidiaries in which it has a controlling interest, consolidated entities in which it has made equity investments or has other interests through which it has majority-voting control or it exercises the right to direct the activities that most significantly impact the entity's performance (Costco or the Company). The Company reports noncontrolling interests in consolidated entities as a component of equity separate from the Company's equity. All material inter-company transactions between and among the Company and its consolidated subsidiaries and other consolidated entities have been eliminated in consolidation.

In June 2009, the Financial Accounting Standards Board (FASB) issued amended guidance concerning whether a company's variable interest(s) in an entity constitute a controlling financial interest. The Company adopted this guidance on August 30, 2010 (at the beginning of its fiscal year 2011). As a result of the adoption, the Company determined that its 50%-owned joint venture, Costco Mexico (Mexico), would be consolidated on a prospective basis beginning August 30, 2010. Costco operates 32 warehouses in Mexico similar to Costco warehouses operated elsewhere.

Historically, the Company accounted for its 50% interest in Mexico under the equity method of accounting. The Company's equity method investment in Mexico included in other assets in the accompanying consolidated balance sheet as of August 29, 2010 totaled $357, which was derecognized as part of the initial consolidation of the joint venture on August 30, 2010. Total assets and liabilities increased by approximately 3% due to the initial consolidation and the 50% noncontrolling interest in Mexico of $357 was recorded as a component of equity as a result of the initial consolidation. The initial consolidation of Mexico had no impact on net income or net income per common share attributable to Costco (Net Income). The Company's net income excludes income attributable to noncontrolling interests in its operations in Mexico, Korea, and Taiwan. In December 2010, the Company and its 50% joint venture partner amended the Mexico joint venture agreements. As a result, the Company obtained, subject to certain continuing conditions, majority-voting control of the joint venture. As the Company had previously consolidated the joint venture, these amendments did not impact the Company's consolidated financial statements.

The Company operates membership warehouses that offer low prices on a limited selection of nationally branded and select private-label products in a wide range of merchandise categories in no-frills, self-service facilities. At August 28, 2011, Costco operated 592 warehouses worldwide which included: 429 U.S. locations (in 40 U.S. states and Puerto Rico), 82 Canadian locations (in nine Canadian provinces), 32 Mexico locations, 22 United Kingdom locations, nine Japan locations, eight Taiwan locations, seven Korea locations, and three Australia locations.

 

Fiscal Year End

The Company's fiscal year ends on the Sunday closest to August 31. References to 2011, 2010, and 2009 relate to the 52-week fiscal years ended August 28, 2011, August 29, 2010, and August 30, 2009, respectively.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions.

Reclassifications

Certain reclassifications have been made to prior fiscal year amounts or balances to conform to the presentation in the current fiscal year. These reclassifications did not have a material impact on the Company's previously reported consolidated financial statements.

Cash and Cash Equivalents

The Company considers as cash and cash equivalents all highly liquid investments with a maturity of three months or less at the date of purchase and proceeds due from credit and debit card transactions with settlement terms of less than one week. Credit and debit card receivables were $982 and $862 at the end of 2011 and 2010, respectively.

Short-term Investments

In general, short-term investments have a maturity of three months to five years at the date of purchase. Investments with maturities beyond five years may be classified, based on the Company's determination, as short-term based on their highly liquid nature and because such marketable securities represent the investment of cash that is available for current operations. Short-term investments classified as available-for-sale are recorded at fair value using the specific identification method with the unrealized gains and losses reflected in accumulated other comprehensive income until realized. Realized gains and losses from the sale of available-for-sale securities, if any, are determined on a specific identification basis and all are recorded in interest income and other, net in the consolidated statements of income. Short-term investments classified as held-to-maturity are financial instruments that the Company has the intent and ability to hold to maturity and are reported net of any related amortization and are not remeasured to fair value on a recurring basis.

Fair Value of Financial Instruments

The carrying value of the Company's financial instruments, including cash and cash equivalents, receivables, and accounts payable approximate fair value due to their short-term nature or variable interest rates. See Notes 2, 3, and 4 for the carrying value and fair value of the Company's investments, derivative instruments, and fixed rate debt.

The Company follows the authoritative guidance for fair value measurements relating to financial and nonfinancial assets and liabilities, including the presentation of required disclosures, in its consolidated financial statements. This guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The guidance also establishes a fair value hierarchy, which requires maximizing the use of observable inputs when measuring fair value. The three levels of inputs that may be used are:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.

Level 3: Significant unobservable inputs that are not corroborated by market data.

The following valuation techniques are used to measure fair value:

Level 1 primarily consists of financial instruments, such as money market mutual funds, whose value is based on quoted market prices, such as quoted net asset values published by the fund as supported in an active market, exchange-traded instruments and listed equities.

Level 2 includes assets and liabilities where quoted market prices are unobservable but observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities, or could be obtained from data providers or pricing vendors. The Company's Level 2 assets and liabilities primarily include United States (U.S.) government and agency securities, Federal Deposit Insurance Corporation (FDIC) insured corporate bonds, investments in corporate notes and bonds, asset and mortgage-backed securities, and forward foreign exchange contracts. Valuation methodologies are based on "consensus pricing," using market prices from a variety of industry-standard independent data providers or pricing that considers various assumptions, including time value, yield curve, volatility factors, credit spreads, default rates, loss severity, current market and contractual prices for the underlying instruments or debt, broker and dealer quotes, as well as other relevant economic measures. All are observable in the market or can be derived principally from or corroborated by observable market data, for which the Company typically receives independent external valuation information.

Level 3 is comprised of significant unobservable inputs for valuations from the Company's independent data and a primary pricing vendor that are also supported by little, infrequent, or no market activity. Management considers indicators of significant unobservable inputs such as the lengthening of maturities, later-than-scheduled payments, and any remaining individual securities that have otherwise matured, as indicators of Level 3. Assets and liabilities are considered Level 3 when their fair value inputs are unobservable, unavailable or management concludes that even though there may be some observable inputs, an item should be classified as a Level 3 based on other indicators of significant unobservable inputs, such as situations involving limited market activity, where determination of fair value requires significant judgment or estimation. The Company utilizes the services of a primary pricing vendor, which does not provide access to its proprietary valuation models, inputs and assumptions. While the Company is not provided access to proprietary models of the vendor, the Company reviewed and contrasted pricing received with other pricing sources to ensure accuracy of each asset class for which prices are provided. The Company's review also included an examination of the underlying inputs and assumptions for a sample of individual securities across asset classes, credit rating levels and various durations, a process that is continually performed for each reporting period. In addition, the pricing vendor has an established challenge process in place for all security valuations, which facilitates identification and resolution of potentially erroneous prices. The Company believes that the prices received from the primary pricing vendor are representative of exit prices in accordance with authoritative guidance, and are classified appropriately in the fair value hierarchy.

Our current financial liabilities have fair values that approximate their carrying values. Our long-term financial liabilities consist of long-term debt, which is recorded on the balance sheet at issuance price less unamortized discount.

Receivables, net

Receivables consist of the following at the end of 2011 and 2010:

	2011			2010
Vendor receivables, and other	$	487		$	448
Reinsurance receivables		201			196
Receivables from governmental entities		98			64
Other receivables		96			103
Third-party pharmacy receivables		86			75
Allowance for doubtful accounts		(3	)		(2	)
Receivables, Net	$	965		$	884

Vendor receivables include payments from vendors in the form of volume rebates or other purchase discounts that are evidenced by signed agreements and are reflected in the carrying value of the inventory when earned or as the Company progresses towards earning the rebate or discount and as a component of merchandise costs as the merchandise is sold. Vendor receivable balances are generally presented on a gross basis separate from any related payable due. In certain circumstances, these receivables may be settled against the related payable to that vendor. Other consideration received from vendors is generally recorded as a reduction of merchandise costs upon completion of contractual milestones, terms of the related agreement, or by other systematic approach.

Reinsurance receivables are held by the Company's wholly-owned captive insurance subsidiary. The receivable balance represents amounts ceded through reinsurance arrangements, and are reflected on a gross basis, separate from the amounts assumed under reinsurance, which are presented on a gross basis within other current liabilities on the consolidated balance sheets.

Receivables from governmental entities largely consists of various tax related items.

Third-party pharmacy receivables generally relate to amounts due from members' insurance companies for the amount above their co-pay, which is collected at the point-of-sale.

Amounts are recorded net of an allowance for doubtful accounts. Management determines the allowance for doubtful accounts based on historical experience and application of the specific identification method. Write-offs of receivables were immaterial for fiscal years 2011, 2010, or 2009.

Merchandise Inventories

Merchandise inventories consist of the following at the end of 2011 and 2010:

	2011		2010
United States (primarily LIFO)	$	4,548	$	4,150
Foreign (FIFO)		2,090		1,488
Merchandise Inventories	$	6,638	$	5,638

Merchandise inventories are valued at the lower of cost or market, as determined primarily by the retail inventory method, and are stated using the last-in, first-out (LIFO) method for substantially all U.S. merchandise inventories. Merchandise inventories for all foreign operations are primarily valued by the retail inventory method and are stated using the first-in, first-out (FIFO) method. The Company believes the LIFO method more fairly presents the results of operations by more closely matching current costs with current revenues. The Company records an adjustment each quarter, if necessary, for the estimated effect of inflation or deflation, and these estimates are adjusted to actual results determined at year-end.

Due to inflation in 2011, the merchandise inventories valued at LIFO were lower than the FIFO value, resulting in a charge to merchandise costs of $87. During 2009, due to overall net deflationary trends, the Company recorded a $32 benefit to merchandise costs to adjust inventories valued at LIFO. At the end of 2010, merchandise inventories valued at LIFO approximated FIFO after considering the lower of cost or market principle.

The Company provides for estimated inventory losses between physical inventory counts as a percentage of net sales, using estimates based on the Company's experience. The provision is adjusted periodically to reflect the results of the actual physical inventory counts, which generally occur in the second and fourth fiscal quarters of the fiscal year. Inventory cost, where appropriate, is reduced by estimates of vendor rebates when earned or as the Company progresses towards earning those rebates, provided that they are probable and reasonably estimable.

Property and Equipment

Property and equipment are stated at cost. In general, new building additions are separated into components, each with its own estimated useful life. Depreciation and amortization expense is computed using the straight-line method over estimated useful lives or the lease term, if shorter. Leasehold improvements incurred after the beginning of the initial lease term are depreciated over the shorter of the estimated useful life of the asset or the remaining term of the initial lease plus any renewals that are reasonably assured at the date the leasehold improvement is made.

Estimated useful lives for financial reporting purposes are as follows:

	Years
Buildings and improvements	5 - 50
Equipment and fixtures	3- 20

Repair and maintenance costs are expensed when incurred. Expenditures for remodels, refurbishments and improvements that add to or change the way an asset functions or that extend the useful life of an asset are capitalized. Assets that were removed during the remodel, refurbishment or improvement are retired. When assets are retired or sold, the asset costs and related accumulated depreciation are eliminated, with any remaining gain or loss recorded.

Impairment of Long-Lived Assets

The Company periodically evaluates long-lived assets for impairment when relocating or closing a warehouse or when events or changes in circumstances occur that may indicate the carrying amount of the asset group, generally an individual warehouse, may not be fully recoverable. For asset groups to be held and used, including warehouses to be relocated, the carrying value of the asset group is considered recoverable when the estimated future undiscounted cash flows generated from the use and eventual disposition of the asset group exceed the group's net carrying value. In the event that the carrying value is not considered recoverable, an impairment loss would be recognized for the asset group to be held and used equal to the excess of the carrying value above the estimated fair value of the asset group. For asset groups classified as held for sale (disposal group), the carrying value is compared to the disposal group's fair value less costs to sell. The Company estimates fair value by obtaining market appraisals from third party brokers or other valuation techniques. In 2011, 2010, and 2009, the Company recorded impairment charges of $1, $2, and $11, respectively, included in provision for impaired assets and closing costs, net and interest income and other in the consolidated statements of income. In 2009, the charge was primarily related to the closure of its two Costco Home locations in July 2009.

Assets classified as held for sale were not material as of August 28, 2011 or August 29, 2010.

Other Assets

Other assets consist of the following at the end of 2011 and 2010:

	2011		2010
Prepaid rents, lease costs, and long-term deposits	$	211	$	186
Tax-related assets		179		18
Goodwill, net		74		71
Cash surrender value of life insurance		64		65
Other		95		96
Investment in Mexico		0		357
Other Assets	$	623	$	793

As previously discussed, the Company began consolidating Mexico at the beginning of 2011, on a prospective basis. The amount of retained earnings that represented undistributed earnings of Mexico was $307 at the end of 2010. The Company did not make any capital contributions to its investment in Mexico in 2010 or 2009. The investments and equity in earnings of other unconsolidated joint ventures are not material.

Tax-related assets represent amounts deposited with taxing authorities in connection with ongoing income tax audits and the Company's long term deferred tax assets.

Goodwill resulting from certain business combinations is reviewed for impairment in the fourth quarter of each fiscal year, or more frequently if circumstances dictate. No impairment of goodwill has been incurred to date.

The Company adjusts the carrying value of its employee life insurance contracts to the net cash surrender value at the end of each reporting period.

Accounts Payable

The Company's banking system provides for the daily replenishment of major bank accounts as checks are presented. Accordingly, included in accounts payable at the end of 2011 and 2010 are $108 and $617, respectively, representing the excess of outstanding checks over cash on deposit at the banks on which the checks were drawn.

Insurance/Self-Insurance Liabilities

The Company uses a combination of insurance and self-insurance mechanisms, including a wholly-owned captive insurance entity and participation in a reinsurance program, to provide for potential liabilities for workers' compensation, general liability, property damage, directors and officers liability, vehicle liability, and employee health care benefits. The reinsurance agreement is one year in duration and new agreements are entered into by each participant at their discretion at the commencement of the next fiscal year. Liabilities associated with the risks that are retained by the Company are not discounted and are estimated, in part, by considering historical claims experience, demographic factors, severity factors, and other actuarial assumptions. The estimated accruals for these liabilities could be significantly affected if future occurrences and claims differ from these assumptions and historical trends. As of the end of 2011 and 2010, these insurance liabilities were $595 and $541 in the aggregate, respectively, and were included in accounts payable, accrued salaries and benefits, and other current liabilities on the consolidated balance sheets, classified based on their nature.

The Company's wholly-owned captive insurance subsidiary (the captive) receives direct premiums, which are netted against the Company's premium costs in selling, general and administrative expenses, in the consolidated statements of income. The captive participates in a reinsurance program that includes other third-party members. The member agreements and practices of the reinsurance program limit any participating members' individual risk. Income statement adjustments related to the reinsurance program and related impacts to the consolidated balance sheets are recognized as information becomes known. In the event the Company leaves the reinsurance program, the Company is not relieved of its primary obligation to the policyholders for activity prior to the termination of the annual agreement.

Other Current Liabilities

Other current liabilities consist of the following at the end of 2011 and 2010:

	2011		2010
Accrued member rewards	$	602	$	522
Insurance-related liabilities		276		263
Tax-related liabilities		122		79
Cash card liability		112		100
Deferred sales		141		98
Other current liabilities		96		86
Vendor consideration liabilities		66		57
Sales return reserve		74		72
Interest payable		51		51
Other Current Liabilities	$	1,540	$	1,328

Derivatives

The Company is exposed to foreign-currency exchange-rate fluctuations in the normal course of business. The Company manages these fluctuations, in part, through the use of forward foreign-exchange contracts, seeking to economically hedge the impact of fluctuations of foreign exchange on known future expenditures denominated in a foreign-currency. The contracts are intended primarily to economically hedge exposure to U.S. dollar merchandise inventory expenditures made by the Company's international subsidiaries or other entities whose functional currency is other than the U.S. dollar. Currently, these contracts do not qualify for derivative hedge accounting. The Company seeks to mitigate risk with the use of these contracts and does not intend to engage in speculative transactions. These contracts do not contain any credit-risk-related contingent features. The aggregate notional amounts of forward foreign-exchange contracts were $247 and $225 at the end of 2011 and 2010, respectively.

The Company seeks to manage counterparty risk associated with these contracts by limiting transactions to counterparties with which the Company has an established banking relationship. There can be no assurance, however, that this practice effectively mitigates counterparty risk. The contracts are limited to less than one year in duration. See Note 3 for information on the fair value of open, unsettled forward foreign-exchange contracts as of August 28, 2011, and August 29, 2010.

The amount of net foreign-currency transaction gains or losses recognized in interest income and other, net in the accompanying consolidated statements of income relating to forward foreign-exchange contracts were nominal in 2011, 2010 and 2009. These gains and losses are largely offset by the impact of revaluing related foreign currency denominated payables, which are also recognized in interest income and other, net.

The Company is exposed to risks due to fluctuations in prices for the energy it consumes, particularly electricity and natural gas, which it seeks to partially mitigate through the use of fixed-price contracts for approximately 36% of its warehouses and other facilities, primarily in the U.S. and Canada. The Company also enters into variable-priced contracts for some purchases of natural gas, in addition to fuel for its gas stations, on an index basis. These contracts meet the characteristics of derivative instruments, but generally qualify for the "normal purchases or normal sales" exception under authoritative guidance and thus require no mark-to-market adjustment.

Foreign-Currency

The functional currencies of the Company's international subsidiaries are the local currency of the country in which the subsidiary is located. Assets and liabilities recorded in foreign currencies are translated at the exchange rate on the balance sheet date. Translation adjustments resulting from this process are recorded in accumulated other comprehensive income. Revenues and expenses of the Company's consolidated foreign operations are translated at average rates of exchange prevailing during the year.

The Company recognizes foreign-currency transaction gains and losses related to revaluing all monetary assets and liabilities denominated in currencies other than the functional currency, generally the U.S. dollar payables of consolidated subsidiaries to their functional currency, in interest income and other, net in the accompanying consolidated statements of income. These gains and losses were $8 and $13 in 2011 and 2010, respectively and not significant in 2009.

Revenue Recognition

The Company generally recognizes sales, net of estimated returns, at the time the member takes possession of merchandise or receives services. When the Company collects payments from customers prior to the transfer of ownership of merchandise or the performance of services, the amounts received are generally recorded as deferred sales included in other current liabilities on the consolidated balance sheets until the sale or service is completed. The Company reserves for estimated sales returns based on historical trends in merchandise returns, net of the estimated net realizable value of merchandise inventories to be returned and any estimated disposition costs. Amounts collected from members, which under common trade practices are referred to as sales taxes, are recorded on a net basis.

The Company evaluates whether it is appropriate to record the gross amount of merchandise sales and related costs or the net amount earned as commissions. Generally, when Costco is the primary obligor, is subject to inventory risk, has latitude in establishing prices and selecting suppliers, can influence product or service specifications, or has several but not all of these indicators, revenue is recorded on a gross basis. If the Company is not the primary obligor and does not possess other indicators of gross reporting as noted above, it records the net amounts as commissions earned, which is reflected in net sales.

Membership fee revenue represents annual membership fees paid by substantially all of the Company's members. The Company accounts for membership fee revenue, net of estimated refunds, on a deferred basis, whereby revenue is recognized ratably over the one-year membership period. As previously disclosed, effective with renewals occurring on and after March 1, 2009, the Company changed an element of its membership renewal policy. Memberships renewed within two months after expiration of the current membership year are extended for twelve months from the expiration date. (Under the previous policy, renewals within six months of the expiration date were extended for twelve months from the expiration date.) Memberships renewed more than two months after such expiration date are extended for twelve months from the renewal date. This change has had an immaterial effect of deferring recognition of certain membership fees paid by late-renewing members.

The Company's Executive Members qualify for a 2% reward (up to a maximum of approximately five hundred dollars per year on qualified purchases made at Costco), which can be redeemed at Costco warehouses. The Company accounts for this reward as a reduction in sales, with the related accrued member rewards liability included in other current liabilities on the consolidated balance sheets. The sales reduction and corresponding liability are computed after giving effect to the estimated impact of non-redemptions based on historical data. The net reduction in sales was $790, $688, and $610 in 2011, 2010, and 2009, respectively.

Merchandise Costs

Merchandise costs consist of the purchase price of inventory sold, inbound shipping charges and all costs related to the Company's depot operations, including freight from depots to selling warehouses, and are reduced by vendor consideration. Merchandise costs also include salaries, benefits and depreciation on production equipment in certain fresh foods and ancillary departments.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist primarily of salaries, benefits and workers' compensation costs for warehouse employees, other than fresh foods departments and certain ancillary businesses, as well as all regional and home office employees, including buying personnel. Selling, general and administrative expenses also include utilities, bank charges, rent and substantially all building and equipment depreciation, as well as other operating costs incurred to support warehouse operations.

Marketing and Promotional Expenses

Costco's policy is generally to limit marketing and promotional expenses to new warehouse openings, occasional direct mail marketing to prospective new members and direct mail marketing programs to existing members promoting selected merchandise. Marketing and promotional costs are expensed as incurred and are included in selling, general and administrative expenses in the accompanying consolidated statements of income.

Stock-Based Compensation

Compensation expense for all stock-based awards granted is recognized using the straight-line method. The fair value of restricted stock units (RSUs) is calculated as the market value of the common stock on the measurement date less the present value of the expected dividends forgone during the vesting period. The fair value of stock options is measured using the Black-Scholes valuation model. While options and RSUs granted to employees generally vest over five years, all grants allow for either daily or quarterly vesting of the pro-rata number of stock-based awards that would vest on the next anniversary of the grant date in the event of retirement or voluntary termination. The historical experience rate of actual forfeitures has been minimal. As such, the Company does not reduce stock-based compensation for an estimate of forfeitures because the estimate is inconsequential in light of historical experience and considering the awards vest on either a daily or quarterly basis. The impact of actual forfeitures arising in the event of involuntary termination is recognized as actual forfeitures occur, which generally has been infrequent. Stock options have a ten-year term. Stock-based compensation expense is predominately included in selling, general and administrative expenses on the consolidated statements of income. See Note 7 for additional information on the Company's stock-based compensation plans.

Leases

The Company leases land and/or buildings at warehouses and certain other office and distribution facilities primarily under operating leases. Operating leases expire at various dates through 2051, with the exception of one lease in the Company's United Kingdom subsidiary, which expires in 2151. These leases generally contain one or more of the following options which the Company can exercise at the end of the initial lease term: (a) renewal of the lease for a defined number of years at the then-fair market rental rate or rate stipulated in the lease agreement; (b) purchase of the property at the then-fair market value; or (c) right of first refusal in the event of a third party purchase offer.

The Company accounts for its lease expense with free rent periods and step-rent provisions on a straight-line basis over the original term of the lease, from the date the Company has control of the property. Certain leases provide for periodic rental increases based on the price indices, and some of the leases provide for rents based on the greater of minimum guaranteed amounts or sales volume.

The Company has entered into four capital leases for warehouse locations, expiring at various dates through 2040. Capital lease assets are included in buildings and improvements in the accompanying consolidated balance sheets. Amortization expense on capital lease assets is recorded as depreciation expense and is predominately included in selling, general and administrative expenses. Capital lease liabilities are recorded at the lesser of the estimated fair market value of the leased property or the net present value of the aggregate future minimum lease payments and are included in other current liabilities and other liabilities. Interest on these obligations is included in interest expense.

Preopening Expenses

Preopening expenses related to new warehouses, new regional offices and other startup operations are expensed as incurred.

Provision for Impaired Assets and Closing Costs, Net

Warehouse closing costs incurred relate principally to expenses associated with the Company's relocation of certain warehouses (that were not otherwise impaired) to larger and better-located facilities. The provisions for 2011, 2010, and 2009 included charges in the amounts indicated below:

	2011		2010		2009
Warehouse closing expenses	$	8	$	6	$	9
Impairment of long-lived assets		1		2		8
Provision for Impaired Assets and Closing Costs, Net	$	9	$	8	$	17

Warehouse closing expenses primarily relate to accelerated building depreciation based on the shortened useful life through the expected closing date and remaining lease obligations, net of estimated sublease income, for leased locations. At the end of 2011 and 2010, the Company's reserve for warehouse closing costs was $5 and primarily related to estimated future lease obligations and other estimated contractual obligations associated with exiting the properties.

Interest Income and Other, Net

Interest income and other, net includes:

	2011		2010		2009
Interest income, net	$	41	$	23	$	27
Earnings of affiliates and other, net		19		65		31
Interest Income and Other, Net	$	60	$	88	$	58

As previously discussed, Costco began consolidating Mexico at the beginning of 2011, on a prospective basis. For 2010 and 2009, the equity in earnings of Mexico is included in interest income and other, net in the accompanying consolidated statements of income, and was $41 and $32, respectively.

The Company periodically evaluates unrealized losses in its investment securities for other-than-temporary impairment using both qualitative and quantitative criteria. In the event a security is deemed to be other-than-temporarily impaired, the Company recognizes the credit loss component in interest income and other, net in the consolidated statements of income. The Company generally only invests in debt securities.

Income Taxes

The Company accounts for income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credits and loss carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences and carry-forwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established when necessary to reduce deferred tax assets to amounts expected to be realized.

The determination of the Company's provision for income taxes requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. Significant judgment is required in assessing the timing and amounts of deductible and taxable items and the probability of sustaining uncertain tax positions. The benefits of uncertain tax positions are recorded in the Company's consolidated financial statements only after determining a more-likely-than-not probability that the uncertain tax positions will withstand challenge, if any, from tax authorities. When facts and circumstances change, the Company reassesses these probabilities and records any changes in the consolidated financial statements as appropriate. See Note 9 for additional information.

Net Income Attributable to Costco per Common Share

The computation of basic net income per share uses the weighted average number of shares that were outstanding during the period. The computation of diluted net income per share uses the weighted average number of shares in the basic net income per share calculation plus the number of common shares that would be issued assuming exercise and vesting of all potentially dilutive common shares outstanding using the treasury stock method for shares subject to stock options and restricted stock units and the "if converted" method for the convertible note securities.

Stock Repurchase Programs

Repurchased shares of common stock are retired, in accordance with the Washington Business Corporation Act. The par value of repurchased shares is deducted from common stock and the excess repurchase price over par value is deducted from additional paid-in capital and retained earnings. See Note 6 for additional information.

Recently Adopted Accounting Pronouncements

As discussed above in Note 1, the Company adopted guidance related to consolidation of variable interest entities.

In October 2009, the FASB issued amended guidance on revenue recognition for multiple-deliverable revenue arrangements. Under this guidance, when vendor-specific objective evidence or third-party evidence for deliverables in an arrangement cannot be determined, a best estimate of the selling price is required to separate deliverables and allocate arrangement consideration using the relative selling-price method. This guidance also prescribes disclosure requirements on how the application of the relative selling price method affects the timing and amount of revenue recognition. The Company adopted this guidance at the beginning of its fiscal year 2011. The adoption of this standard did not have a material impact on the Company's consolidated financial statements.

In January 2010, the FASB issued guidance to amend the disclosure requirements related to recurring and nonrecurring fair value measurements. The guidance requires disclosure of transfers of assets and liabilities between Level 1 and Level 2 of the fair value measurement hierarchy, including the reasons and the timing of the transfers. Under Level 3 of the fair value measurement hierarchy, the guidance requires disclosure of information on purchases, sales, issuances, and settlements on a gross basis (as opposed to a net basis) in the reconciliation of the assets and liabilities measured. The Company adopted this guidance at the beginning of its third quarter of fiscal 2010, except for the Level 3 reconciliation disclosures on the roll-forward activities, which were adopted at the beginning of its third quarter of fiscal 2011. The adoption of this standard did not have a material impact on the Company's consolidated financial statement disclosures.

Recent Accounting Pronouncements Not Yet Adopted

In May 2011, the FASB issued guidance to amend the requirements related to fair value measurement which changes the wording used to describe many requirements in GAAP for measuring fair value and for disclosing information about fair value measurements. Additionally, the amendments clarify the FASB's intent about the application of existing fair value measurement requirements. The amended guidance is effective for interim and annual periods beginning after December 15, 2011, and is applied prospectively. The Company plans to adopt this guidance at the beginning of its third quarter of fiscal year 2012. Adoption of this guidance is not expected to have a material impact on the Company's consolidated financial statement disclosure.

In June 2011, the FASB issued guidance on presentation of comprehensive income. The new guidance eliminates the current option to report other comprehensive income and its components in the statement of changes in equity. Instead, an entity will be required to present either a continuous statement of net income and other comprehensive income or to present the information in two separate but consecutive statements. The new guidance must be applied retrospectively and is effective for interim and annual periods beginning after December 15, 2011. The Company plans to adopt this guidance at the beginning of its third quarter of fiscal 2012. Adoption of this guidance is not expected to have a material impact on the Company's consolidated financial statements and will impact the financial statements' presentation only.

In September 2011, the FASB issued guidance to amend and simplify the rules related to testing goodwill for impairment. The revised guidance allows an entity to make an initial qualitative evaluation, based on the entity's events and circumstances, to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The results of this qualitative assessment determine whether it is necessary to perform the currently required two-step impairment test. The new guidance is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted. The Company plans to early adopt this guidance for its fiscal year 2012 annual impairment test. Adoption of this guidance is not expected to have a material impact on the Company's consolidated financial statements.

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Summary Of Significant Accounting Policies (Other Current Liabilities) (Details) (USD $) In Millions	Aug. 28, 2011	Aug. 29, 2010
Summary Of Significant Accounting Policies
Accrued member rewards	$ 602	$ 522
Insurance-related liabilities	276	263
Tax-related liabilities	122	79
Cash card liability	112	100
Deferred sales	141	98
Other current liabilities	96	86
Vendor consideration liabilities	66	57
Sales return reserve	74	72
Interest payable	51	51
Other Current Liabilities	$ 1,540	$ 1,328

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Income Taxes (Tables)

12 Months Ended

Aug. 28, 2011

Income Taxes

Income Before Income Taxes

	2011		2010		2009
Domestic (including Puerto Rico)	$	1,526	$	1,426	$	1,426
Foreign		857		628		301
Total	$	2,383	$	2,054	$	1,727

Schedule Of Foreign And Domestic Income Taxes

	2011			2010		2009
Federal:
Current	$	409		$	445	$	396
Deferred		74			1		67
Total federal		483			446		463
State:
Current		78			79		66
Deferred		14			5		12
Total state		92			84		78
Foreign:
Current		270			200		94
Deferred		(4	)		1		(7	)
Total foreign		266			201		87
Total provision for income taxes	$	841		$	731	$	628

Reconciliation Between Statutory And Effective Rates

	2011					2010					2009
Federal taxes at statutory rate	$	834		35.0	%	$	718		35.0	%	$	604		35.0	%
State taxes, net		55		2.4			56		2.7			48		2.8
Foreign taxes, net		(66	)	(2.8	)		(38	)	(1.9	)		(24	)	(1.4	)
Other		18		0.7			(5	)	(0.2	)		0		0
Total	$	841		35.3	%	$	731		35.6	%	$	628		36.4	%

Components Of Deferred Tax Assets And Liabilities

	2011		2010
Equity compensation	$	89	$	112
Deferred income/membership fees		134		118
Accrued liabilities and reserves		429		392
Other		32		35
Total deferred tax assets		684		657
Property and equipment		494		414
Merchandise inventories		164		170
Total deferred tax liabilities		658		584
Net deferred tax assets	$	26	$	73

Gross Unrecognized Tax Benefits

	2011			2010
Gross unrecognized tax benefit at beginning of year	$	83		$	80
Gross increases—current year tax positions		21			29
Gross increases—tax positions in prior years		10			4
Gross decreases—tax positions in prior years		(6	)		(1	)
Settlements		(1	)		(27	)
Lapse of statute of limitations		(1	)		(2	)
Gross unrecognized tax benefit at end of year	$	106		$	83

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Stockholders' Equity (Stock Repurchased During The Period) (Details) (USD $) In Millions, except Share data in Thousands, unless otherwise specified	12 Months Ended
	Aug. 28, 2011	Aug. 29, 2010	Aug. 30, 2009
Stockholders' Equity
Shares Repurchased (000's)	8,939	9,943	895
Average Price per Share	$ 71.74	$ 57.14	$ 63.84
Total Cost	$ 641	$ 568	$ 57

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Stockholders' Equity (Schedule Of Accumulated Other Comprehensive Income) (Details) (USD $) In Millions	Aug. 28, 2011	Aug. 29, 2010
Stockholders' Equity
Unrealized gains on short-term investments	$ 7	$ 6
Foreign currency translation adjustment and other	366	116
Accumulated other comprehensive income	$ 373	$ 122

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Debt (Schedule Of Principal Converted) (Details) (3.5% Zero Coupon Convertible Subordinated Notes Due August 2017, USD $) In Millions, except Share data in Thousands	12 Months Ended
	Aug. 28, 2011	Aug. 29, 2010	Aug. 30, 2009
3.5% Zero Coupon Convertible Subordinated Notes Due August 2017
Principal converted during period	$ 3	$ 1	$ 25
Principal converted, including the related debt discount	$ 2	$ 1	$ 19
Shares issued upon conversion (000's)	65	18	562

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Stock-Based Compensation Plans (Options Exercisable) (Details) (USD $) In Thousands, except Per Share data	Aug. 29, 2010	Aug. 30, 2009
Stock-Based Compensation Plans
Options Exercisable, Number of Options	13,032	16,588
Options Exercisable, Weighted-Average Exercise Price	$ 39.43	$ 39.62

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Investments

12 Months Ended

Aug. 28, 2011

Investments

Investments

Note 2—Investments

The major categories of the Company's investments are as follows:

Money market mutual funds

The Company invests in money funds that seek to maintain a net asset value of par, while limiting overall exposure to credit, market, and liquidity risks.

U.S. government and agency securities

These U.S. government-secured debt instruments are publically traded and valued. Losses in this category are primarily due to market liquidity and interest rate reductions.

Corporate notes and bonds

The Company evaluates its corporate debt securities based on a variety of factors including, but not limited to, the credit rating of the issuer. The vast majority of the Company's corporate debt securities are rated investment grade by the major rating agencies.

FDIC-insured corporate bonds

These bonds are guaranteed by the full faith and credit of the U.S. government under the FDIC's Temporary Liquidity Guarantee Program. Losses in this category are primarily due to market liquidity and interest rate reductions.

Asset and mortgage-backed securities

The vast majority of the Company's asset and mortgage-backed securities have investment grade credit ratings from the major rating agencies. These investments are collateralized by residential real estate, credit card receivables, commercial real estate, foreign mortgage receivables, and lease receivables. Estimates of fair value are based upon a variety of factors including, but not limited to, credit rating of the issuer, internal credit risk, interest rate variation, prepayment assumptions, and the potential for default.

Certificates of deposit

Certificate of deposits are short-term interest-bearing debt instruments issued by various financial institutions with which the Company has an established banking relationship.

The Company's investments at the end of 2011 and 2010, were as follows:

2011:	Cost Basis		Unrealized Gains		Unrealized Losses		Recorded Basis
Available-for-sale:
U.S. government and agency securities	$	1,096	$	8	$	0	$	1,104
Corporate notes and bonds		6		1		0		7
FDIC-insured corporate bonds		208		1		0		209
Asset and mortgage-backed securities		12		0		0		12
Total available-for-sale		1,322		10		0		1,332
Held-to-maturity:
Certificates of deposit		272						272
Total investments	$	1,594	$	10	$	0	$	1,604
2010:	Cost Basis		Unrealized Gains		Unrealized Losses		Recorded Basis
Available-for-sale:
U.S. government and agency securities	$	1,222	$	7	$	0	$	1,229
Corporate notes and bonds		10		1		0		11
FDIC-insured corporate bonds		139		0		0		139
Asset and mortgage-backed securities		23		0		0		23
Total available-for-sale		1,394		8		0		1,402
Held-to-maturity:
Certificates of deposit		133						133
Total investments	$	1,527	$	8	$	0	$	1,535

Gross unrealized gains and losses on cash equivalents were not material at August 28, 2011 and August 29, 2010.

The proceeds and gross realized gains and losses from sales of available-for-sale securities during 2011, 2010, and 2009 are provided in the following table:

	2011		2010		2009
Proceeds	$	602	$	309	$	183
Realized gains		1		5		5
Realized losses		0		1		2

During 2009, the Company recognized $12 other-than-temporary impairment losses related to certain enhanced money fund investment securities, which were included in interest income and other, net in the accompanying consolidated statements of income. At the end of 2010, the Company no longer held any of these securities. At the end of 2011 and 2010 the Company's available-for-sale securities that were in continuous unrealized-loss position were insignificant.

The maturities of available-for-sale and held-to-maturity securities at August 28, 2011 were as follows:

	Available-For-Sale				Held-To-Maturity
	Cost Basis		Fair Value		Cost Basis		Fair Value
Due in one year or less	$	890	$	892	$	272	$	272
Due after one year through five years		426		433		0		0
Due after five years		6		7		0		0
	$	1,322	$	1,332	$	272	$	272

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Commitments And Contingencies (Details) (USD $) In Millions	12 Months Ended
	Aug. 28, 2011
Commitments And Contingencies
Legal reserve amount	$ 4.85

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Summary Of Significant Accounting Policies (Interest Income And Other, Net) (Details) (USD $) In Millions	3 Months Ended												12 Months Ended
	May 08, 2011		Feb. 13, 2011		Nov. 21, 2010		May 09, 2010	Feb. 14, 2010	Nov. 22, 2009	Aug. 28, 2011		Aug. 29, 2010	Aug. 28, 2011		Aug. 29, 2010	Aug. 30, 2009
Summary Of Significant Accounting Policies
Interest income, net													$ 41		$ 23	$ 27
Earnings of affiliates and other, net													19		65	31
Interest Income and Other, Net	$ 5	[1]	$ 4	[1]	$ 5	[1]	$ 10	$ 30	$ 18	$ 46	[1]	$ 30	$ 60	[1]	$ 88	$ 58

[1] As discussed in Note 1, the Company began consolidating Mexico on August 30, 2010.

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Leases (Tables)

12 Months Ended

Aug. 28, 2011

Leases

Aggregate Rental Expense And Sublease Income

	Aggregate rental expense		Sublease income(1)
2011	$	208	$	10
2010		187		10
2009		177		10

(1) Included in interest income and other, net

Schedule Of Future Minimum Lease Payments

	Operating leases		Capital lease obligations
2012	$	183	$	13
2013		182		13
2014		175		13
2015		162		13
2016		155		13
Thereafter		1,850		311
Total	$	2,707		376
Less amount representing interest				(207	)
Net present value of minimum lease payment				169
Less current installments(1)				(3	)
Long-term capital lease obligations less current installments(2)			$	166

(1) Included in other current liabilities.

(2) Included in deferred income taxes and other liabilities.

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Stock-Based Compensation Plans (Summary Of RSU Transactions) (Details) (Restricted Stock Units [Member], USD $) In Thousands, except Per Share data	12 Months Ended
	Aug. 28, 2011
Restricted Stock Units [Member]
Non-vested at the end of 2010, Number of Units	9,253
Granted, Number of Units	3,971
Vested, Number of Units	(3,322)
Forfeited, Number of Units	(175)
Non-vested at the end of 2011, Number of Units	9,727
Non-vested at the end of 2010, Weighted-Average Grant Date Fair Value	$ 55.22
Granted, Weighted-Average Grant Date Fair Value	$ 61.27
Vested, Weighted-Average Grant Date Fair Value	$ 55.55
Forfeited, Weighted-Average Grant Date Fair Value	$ 55.90
Non-vested at the end of 2011, Weighted-Average Grant Date Fair Value	$ 57.56

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Quarterly Financial Data (Details) (USD $) In Millions, except Share data in Thousands, unless otherwise specified	3 Months Ended													12 Months Ended
	May 08, 2011		Feb. 13, 2011		Nov. 21, 2010		May 09, 2010	Feb. 14, 2010		Nov. 22, 2009	Aug. 28, 2011		Aug. 29, 2010	Aug. 28, 2011		Aug. 29, 2010	Aug. 30, 2009
REVENUE
Net sales	$ 20,188	[1]	$ 20,449	[1]	$ 18,823	[1]	$ 17,385	$ 18,356		$ 16,922	$ 27,588	[1]	$ 23,592	$ 87,048	[1]	$ 76,255	$ 69,889
Membership fees	435	[1]	426	[1]	416	[1]	395	386		377	590	[1]	533	1,867	[1]	1,691	1,533
Total revenue	20,623	[1]	20,875	[1]	19,239	[1]	17,780	18,742		17,299	28,178	[1]	24,125	88,915	[1]	77,946	71,422
OPERATING EXPENSES
Merchandise costs	18,067	[1],[2]	18,235	[1],[2]	16,757	[1]	15,494	16,396		15,081	24,680	[1],[2]	21,024	77,739	[1]	67,995	62,335
Selling, general and administrative	1,991	[1]	2,038	[1]	1,941	[1]	1,789	1,873	[3]	1,777	2,712	[1]	2,401	8,682	[1]	7,840	7,252
Preopening expenses	8	[1]	4	[1]	12	[1]	3	3		11	22	[1]	9	46	[1]	26	41
Provision for impaired assets and closing costs, net	1	[1]	2	[1]	4	[1]	3	0		2	2	[1]	3	9	[1]	8	17
Operating income	556	[1]	596	[1]	525	[1]	491	470		428	762	[1]	688	2,439	[1]	2,077	1,777
OTHER INCOME (EXPENSE)
Interest expense	(27)	[1]	(27)	[1]	(26)	[1]	(27)	(26)		(24)	(36)	[1]	(34)	(116)	[1]	(111)	(108)
Interest income and other, net	5	[1]	4	[1]	5	[1]	10	30		18	46	[1]	30	60	[1]	88	58
INCOME BEFORE INCOME TAXES	534	[1]	573	[1]	504	[1]	474	474		422	772	[1]	684	2,383	[1]	2,054	1,727
Provision for income taxes	193	[1]	204	[1]	172	[1]	163	169		152	272	[1]	247	841	[1]	731	628
Net income including noncontrolling interests	341	[1]	369	[1]	332	[1]	311	305		270	500	[1]	437	1,542	[1]	1,323	1,099
Net income attributable to noncontrolling interests	(17)	[1]	(21)	[1]	(20)	[1]	(5)	(6)		(4)	(22)	[1]	(5)	(80)	[1]	(20)	(13)
NET INCOME ATTRIBUTABLE TO COSTCO	324	[1]	348	[1]	312	[1]	306	299		266	478	[1]	432	1,462	[1]	1,303	1,086
NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO:
Basic	$ 0.74	[1]	$ 0.80	[1]	$ 0.72	[1]	$ 0.69	$ 0.68		$ 0.61	$ 1.09	[1]	$ 0.99	$ 3.35	[1]	$ 2.97	$ 2.50
Diluted	$ 0.73	[1]	$ 0.79	[1]	$ 0.71	[1]	$ 0.68	$ 0.67		$ 0.60	$ 1.08	[1]	$ 0.97	$ 3.30	[1]	$ 2.92	$ 2.47
Shares used in calculation (000's)
Basic	436,977	[1]	436,682	[1]	434,099	[1]	440,973	439,786		437,173	436,596	[1]	437,071	436,119	[1]	438,611	433,988
Diluted	443,570	[1]	443,186	[1]	441,360	[1]	448,391	446,918		444,849	443,518	[1]	444,289	443,094	[1]	445,970	440,454
Dividends per share	$ 0.240	[1]	$ 0.205	[1]	$ 0.205	[1]	$ 0.205	$ 0.180		$ 0.180	$ 0.240	[1]	$ 0.205	$ 0.89	[1]	$ 0.77	$ 0.68
Increase to merchandise costs for LIFO inventory adjustment	49		6								32			87			32
Charge related to change in employee benefits								$ 22

[1] As discussed in Note 1, the Company began consolidating Mexico on August 30, 2010.

[2] Includes a $6, $49, and $32 increase to merchandise costs for a LIFO inventory adjustment for the second, third and fourth quarters, respectively. (See note 1—Merchandise Inventories).

[3] Includes a $22 charge related to a change in employee benefits whereby certain unused time off will now be paid annually to our employees.

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Stock-Based Compensation Plans (Summary Of Stock Option Activity) (Details) (USD $) In Millions, except Share data in Thousands, unless otherwise specified	12 Months Ended
	Aug. 28, 2011
Stock-Based Compensation Plans
Outstanding at the end of 2010, Number of Options	13,162
Exercised, Number of Options	(7,245)
Outstanding and exercisable at the end of 2011, Number of Options	5,917
Outstanding at the end of 2010, Weighted-Average Exercise Price	$ 39.50
Exercised, Weighted-Average Exercise Price	$ 39.03
Outstanding and exercisable at the end of 2011, Weighted-Average Exercise Price	$ 40.07
Outstanding and exercisable at the end of 2011, Weighted-Average Remaining Contractual Term (in years)	2.77
Outstanding and exercisable at the end of 2011, Aggregate Intrinsic Value	$ 220	[1]

[1] The difference between the exercise price and market value of common stock at August 28, 2011.

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Segment Reporting (Tables)

12 Months Ended

Aug. 28, 2011

Segment Reporting

Segment Reporting Information, By Segment

	United States Operations		Canadian Operations		Other International Operations		Total
Year Ended August 28, 2011
Total revenue	$	64,904	$	14,020	$	9,991	$	88,915
Operating income		1,395		621		423		2,439
Depreciation and amortization		640		117		98		855
Capital expenditures, net		876		144		270		1,290
Property and equipment, net		8,870		1,608		1,954		12,432
Total assets		18,558		3,741		4,462		26,761
Year Ended August 29, 2010
Total revenue	$	59,624	$	12,051	$	6,271	$	77,946
Operating income		1,310		547		220		2,077
Depreciation and amortization		625		107		63		795
Capital expenditures, net		804		162		89		1,055
Property and equipment, net		8,709		1,474		1,131		11,314
Total assets		18,247		3,147		2,421		23,815
Year Ended August 30, 2009
Total revenue	$	56,548	$	9,737	$	5,137	$	71,422
Operating income		1,273		354		150		1,777
Depreciation and amortization		589		90		49		728
Capital expenditures, net		904		135		211		1,250
Property and equipment, net		8,415		1,394		1,091		10,900
Total assets		17,228		2,641		2,110		21,979

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Summary Of Significant Accounting Policies (Provision For Impaired Assets And Closing Costs, Net) (Details) (USD $) In Millions	12 Months Ended
	Aug. 28, 2011	Aug. 29, 2010	Aug. 30, 2009
Summary Of Significant Accounting Policies
Warehouse closing expenses	$ 8	$ 6	$ 9
Impairment of long-lived assets	1	2	8
Provision for Impaired Assets and Closing Costs, Net	$ 9	$ 8	$ 17

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Stock-Based Compensation Plans (Tables)

12 Months Ended

Aug. 28, 2011

Stock-Based Compensation Plans

Summary Of Stock Option Activity

	Number Of Options (in 000's)			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value(1)
Outstanding at the end of 2010		13,162		$	39.50
Exercised		(7,245	)		39.03
Outstanding and exercisable at the end of 2011		5,917		$	40.07		2.77	$	220

(1) The difference between the exercise price and market value of common stock at August 28, 2011.

Stock Options Outstanding

	Options Outstanding and Exercisable
Range of Prices	Number of Options (in 000's)		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price
$30.41–$37.35		2,446		2.19	$	35.38
$37.44–$42.41		481		0.67		39.05
$43.79–$43.79		2,649		3.59		43.79
$45.99–$46.46		341		3.58		46.19
		5,917		2.77	$	40.07

Options Exercisable

	2010		2009
Options exercisable (shares in 000's)		13,032		16,588
Weighted average exercise price	$	39.43	$	39.62

Tax Benefits Realized And Intrinsic Value Related To Total Stock Options Exercised

	2011		2010		2009
Actual tax benefit realized for stock options exercised	$	78	$	34	$	10
Intrinsic value of stock options exercised(1)	$	227	$	98	$	27

(1) The difference between the exercise price and market value of common stock measured at each individual exercise date.

Summary Of RSU Transactions

	Number of Units (in 000's)			Weighted-Average Grant Date Fair Value
Non-vested at the end of 2010		9,253		$	55.22
Granted		3,971			61.27
Vested		(3,322	)		55.55
Forfeited		(175	)		55.90
Non-vested at the end of 2011		9,727		$	57.56

Summary Of Stock-Based Compensation Expense

	2011		2010		2009
Restricted stock units	$	206	$	171	$	132
Stock options		1		19		49
Total stock-based compensation expense before income taxes		207		190		181
Less recognized income tax benefit		67		63		60
Total stock-based compensation expense, net of income taxes	$	140	$	127	$	121

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Net Income Per Common And Common Equivalent Share

12 Months Ended

Aug. 28, 2011

Net Income Per Common And Common Equivalent Share

Net Income Per Common And Common Equivalent Share

Note 10—Net Income Per Common and Common Equivalent Share

The following table shows the amounts used in computing net income per share and the effect on income and the weighted average number of shares of dilutive potential common stock (shares in 000's):

	2011		2010		2009
Net income available to common stockholders used in basic net income per common share	$	1,462	$	1,303	$	1,086
Interest on convertible notes, net of tax		1		1		1
Net income available to common stockholders after assumed conversions of dilutive securities	$	1,463	$	1,304	$	1,087
Weighted average number of common shares used in basic net income per common share		436,119		438,611		433,988
Stock options and RSUs		6,063		6,409		5,072
Conversion of convertible notes		912		950		1,394
Weighted number of common shares and dilutive potential of common stock used in diluted net income per share		443,094		445,970		440,454
Anti-dilutive stock options and RSUs		0		1,141		8,045

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Leases (Schedule Of Future Minimum Lease Payments For Capital Leases) (Details) (USD $) In Millions	Aug. 28, 2011
Leases
Operating leases, 2012	$ 183
Operating leases, 2013	182
Operating leases, 2014	175
Operating leases, 2015	162
Operating leases, 2016	155
Operating leases, Thereafter	1,850
Operating leases, Total	2,707
Capital lease obligations, 2012	13
Capital lease obligations, 2013	13
Capital lease obligations, 2014	13
Capital lease obligations, 2015	13
Capital lease obligations, 2016	13
Capital lease obligations, Thereafter	311
Capital lease obligations, Total	376
Less: Amount representing interest	(207)
Net present value of minimum lease payment	169
Less current installments	(3)	[1]
Long-term capital lease obligations less current installments	$ 166	[2]

[1] Included in other current liabilities.

[2] Included in deferred income taxes and other liabilities.

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Income Taxes (Gross Unrecognized Tax Benefits) (Details) (USD $) In Millions	12 Months Ended
	Aug. 28, 2011	Aug. 29, 2010
Income Taxes
Gross unrecognized tax benefit at beginning of year	$ 83	$ 80
Gross increases - current year tax positions	21	29
Gross increases - tax positions in prior years	10	4
Gross decreases - tax positions in prior years	(6)	(1)
Settlements	(1)	(27)
Lapse of statute of limitations	(1)	(2)
Gross unrecognized tax benefit at end of year	$ 106	$ 83

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Stock-Based Compensation Plans (Narrative) (Details) (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	Aug. 28, 2011 years
Additional number of shares authorized	18,000,000
Portion of each share issued counted towards limit of shares available	1.75
Non-recurring benefit tax benefit to selling, general and administrative expense related to reversal of expense related to mitigating potential adverse tax consequences	$ 24
Number of shares available to be granted as RSUs	8,565,000
Minimum years of service in company necessary to receive accelerated vesting	25
Time-based RSU awards outstanding	9,010,000
Performance-based RSU awards outstanding	717,000
Outstanding performance-based RSU awards to be granted	315,000
Employees [Member]
Time period over which RSUs vest (in years)	five
Non-Employee Directors [Member]
Time period over which RSUs vest (in years)	three
Restricted Stock Units [Member]
Additional number of shares authorized	10,285,714
Unrecognized compensation cost	$ 386
Weighted-average period of time (in years)	1.6

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Fair Value Measurement

12 Months Ended

Aug. 28, 2011

Fair Value Measurement

Fair Value Measurement

Note 3—Fair Value Measurement

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The tables below present information at the end 2011 and 2010, regarding the Company's financial assets and financial liabilities that are measured at fair value on a recurring basis, and indicate the level within the fair value hierarchy of the valuation techniques utilized to determine such fair value. As of these dates, the Company's holdings of Level 3 financial assets and liabilities were immaterial.

2011:	Level 1		Level 2
Money market mutual funds(1)	$	200	$	0
Investment in U.S. government and agency securities(3)		0		1,177
Investment in corporate notes and bonds		0		7
Investment in FDIC-insured corporate bonds		0		209
Investment in asset and mortgage-backed securities		0		12
Forward foreign-exchange contracts, in asset position(2)		0		1
Forward foreign-exchange contracts, in (liability) position(2)		0		(2	)
Total	$	200	$	1,404

2010:	Level 1		Level 2
Money market mutual funds(1)	$	1,514	$	0
Investment in U.S. government and agency securities		0		1,229
Investment in corporate notes and bonds		0		11
Investment in FDIC-insured corporate bonds		0		139
Investment in asset and mortgage-backed securities		0		23
Forward foreign-exchange contracts, in asset position(2)		0		1
Forward foreign-exchange contracts, in (liability) position(2)		0		(3	)
Total	$	1,514	$	1,400

(1) Included in cash and cash equivalents in the accompanying consolidated balance sheets.

(2) The asset and the liability values are included in deferred income taxes and other current assets and other current liabilities, respectively, in the accompanying consolidated balance sheets. See Note 1 for additional information on derivative instruments.

(3) $73 and $1,104 included in cash and cash equivalents and short-term investments, respectively, in the accompanying consolidated balance sheets.

Changes in fair value, including net transfers, of all financial assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during 2011 and 2010 were immaterial.

The Company reports transfers in and out of Levels 1, 2, and 3, as applicable, using the fair value of the individual securities as of the beginning of the reporting period in which the transfer occurred. There were no transfers in or out of Level 1, 2, or 3 during 2011 and 2010.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Financial assets measured at fair value on a nonrecurring basis include held-to-maturity investments that are carried at amortized cost and are not remeasured to fair value on a recurring basis. There were no fair value adjustments to these financial assets measured during the 2011 and 2010.

Nonfinancial assets measured at fair value on a nonrecurring basis include items such as long lived assets that are measured at fair value resulting from an impairment, if deemed necessary. Fair value adjustments to these nonfinancial assets and liabilities during 2011 and 2010 were immaterial.

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Quarterly Financial Data

12 Months Ended

Aug. 28, 2011

Quarterly Financial Data

Quarterly Financial Data

Note 13—Quarterly Financial Data (Unaudited)

The two tables that follow reflect the unaudited quarterly results of operations for 2011 and 2010.

	52 Weeks Ended August 28, 2011(1)
	First Quarter 12 Weeks			Second Quarter 12 Weeks			Third Quarter 12 Weeks			Fourth Quarter 16 Weeks			Total 52 Weeks
REVENUE
Net sales	$	18,823		$	20,449		$	20,188		$	27,588		$	87,048
Membership fees		416			426			435			590			1,867
Total revenue		19,239			20,875			20,623			28,178			88,915
OPERATING EXPENSES
Merchandise costs		16,757			18,235	(2)		18,067	(2)		24,680	(2)		77,739
Selling, general and administrative		1,941			2,038			1,991			2,712			8,682
Preopening expenses		12			4			8			22			46
Provision for impaired assets and closing costs, net		4			2			1			2			9
Operating income		525			596			556			762			2,439
OTHER INCOME (EXPENSE)
Interest expense		(26	)		(27	)		(27	)		(36	)		(116	)
Interest income and other, net		5			4			5			46			60
INCOME BEFORE INCOME TAXES		504			573			534			772			2,383
Provision for income taxes		172			204			193			272			841
Net income including noncontrolling interests		332			369			341			500			1,542
Net income attributable to noncontrolling interests		(20	)		(21	)		(17	)		(22	)		(80	)
NET INCOME ATTRIBUTABLE TO COSTCO	$	312		$	348		$	324		$	478		$	1,462
NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO:
Basic	$	0.72		$	0.80		$	0.74		$	1.09		$	3.35
Diluted	$	0.71		$	0.79		$	0.73		$	1.08		$	3.30
Shares used in calculation (000's)
Basic		434,099			436,682			436,977			436,596			436,119
Diluted		441,360			443,186			443,570			443,518			443,094
Dividends per share	$	0.205		$	0.205		$	0.240		$	0.240		$	0.89

(1) As discussed in Note 1, the Company began consolidating Mexico on August 30, 2010.

(2) Includes a $6, $49, and $32 increase to merchandise costs for a LIFO inventory adjustment for the second, third and fourth quarters, respectively. (See note 1—Merchandise Inventories).

	52 Weeks Ended August 29, 2010
	First Quarter 12 Weeks			Second Quarter 12 Weeks			Third Quarter 12 Weeks			Fourth Quarter 16 Weeks			Total 52 Weeks
REVENUE
Net sales	$	16,922		$	18,356		$	17,385		$	23,592		$	76,255
Membership fees		377			386			395			533			1,691
Total revenue		17,299			18,742			17,780			24,125			77,946
OPERATING EXPENSES
Merchandise costs		15,081			16,396			15,494			21,024			67,995
Selling, general and administrative		1,777			1,873	(3)		1,789			2,401			7,840
Preopening expenses		11			3			3			9			26
Provision for impaired assets and closing costs, net		2			0			3			3			8
Operating income		428			470			491			688			2,077
OTHER INCOME (EXPENSE)
Interest expense		(24	)		(26	)		(27	)		(34	)		(111	)
Interest income and other, net		18			30			10			30			88
INCOME BEFORE INCOME TAXES		422			474			474			684			2,054
Provision for income taxes		152			169			163			247			731
Net income including noncontrolling interests		270			305			311			437			1,323
Net income attributable to noncontrolling interests		(4	)		(6	)		(5	)		(5	)		(20	)
NET INCOME ATTRIBUTABLE TO COSTCO	$	266		$	299		$	306		$	432		$	1,303
NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO:
Basic	$	0.61		$	0.68		$	0.69		$	0.99		$	2.97
Diluted	$	0.60		$	0.67		$	0.68		$	0.97		$	2.92
Shares used in calculation (000's)
Basic		437,173			439,786			440,973			437,071			438,611
Diluted		444,849			446,918			448,391			444,289			445,970
Dividends per share	$	0.180		$	0.180		$	0.205		$	0.205		$	0.77

(3) Includes a $22 charge related to a change in employee benefits whereby certain unused time off will now be paid annually to our employees.

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Stock-Based Compensation Plans (Tax Benefits Realized And Intrinsic Value Related To Total Stock Options Exercised) (Details) (USD $) In Millions	12 Months Ended
	Aug. 28, 2011		Aug. 29, 2010		Aug. 30, 2009
Stock-Based Compensation Plans
Actual tax benefit realized for stock options exercised	$ 78		$ 34		$ 10
Intrinsic value of stock options exercised	$ 227	[1]	$ 98	[1]	$ 27	[1]

[1] The difference between the exercise price and market value of common stock measured at each individual exercise date.

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Stock-Based Compensation Plans (Stock Options Outstanding) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Aug. 28, 2011
Options Outstanding and Exercisable, Number of Options	5,917
Options Outstanding and Exercisable, Weighted-Average Remaining Contractual Life	2.77
Options Outstanding and Exercisable, Weighted-Average Exercise Price	$ 40.07
$30.41 - $37.35 [Member]
Range of Prices, Lower limit	$ 30.41
Range of Prices, Upper limit	$ 37.35
Options Outstanding and Exercisable, Number of Options	2,446
Options Outstanding and Exercisable, Weighted-Average Remaining Contractual Life	2.19
Options Outstanding and Exercisable, Weighted-Average Exercise Price	$ 35.38
$37.44 - $42.41 [Member]
Range of Prices, Lower limit	$ 37.44
Range of Prices, Upper limit	$ 42.41
Options Outstanding and Exercisable, Number of Options	481
Options Outstanding and Exercisable, Weighted-Average Remaining Contractual Life	0.67
Options Outstanding and Exercisable, Weighted-Average Exercise Price	$ 39.05
$43.79 - $43.79 [Member]
Range of Prices, Lower limit	$ 43.79
Range of Prices, Upper limit	$ 43.79
Options Outstanding and Exercisable, Number of Options	2,649
Options Outstanding and Exercisable, Weighted-Average Remaining Contractual Life	3.59
Options Outstanding and Exercisable, Weighted-Average Exercise Price	$ 43.79
$45.99 - $46.46 [Member]
Range of Prices, Lower limit	$ 45.99
Range of Prices, Upper limit	$ 46.46
Options Outstanding and Exercisable, Number of Options	341
Options Outstanding and Exercisable, Weighted-Average Remaining Contractual Life	3.58
Options Outstanding and Exercisable, Weighted-Average Exercise Price	$ 46.19

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Summary Of Significant Accounting Policies (Other Assets) (Details) (USD $) In Millions	Aug. 28, 2011	Aug. 29, 2010
Summary Of Significant Accounting Policies
Prepaid rents, lease costs, and long-term deposits	$ 211	$ 186
Tax-related assets	179	18
Goodwill, net	74	71
Cash surrender value of life insurance	64	65
Other	95	96
Investment in Mexico	0	357
Other Assets	$ 623	$ 793

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Income Taxes (Income Before Income Taxes) (Details) (USD $) In Millions	3 Months Ended												12 Months Ended
	May 08, 2011		Feb. 13, 2011		Nov. 21, 2010		May 09, 2010	Feb. 14, 2010	Nov. 22, 2009	Aug. 28, 2011		Aug. 29, 2010	Aug. 28, 2011		Aug. 29, 2010	Aug. 30, 2009
Income Taxes
Domestic (including Puerto Rico)													$ 1,526		$ 1,426	$ 1,426
Foreign													857		628	301
INCOME BEFORE INCOME TAXES	$ 534	[1]	$ 573	[1]	$ 504	[1]	$ 474	$ 474	$ 422	$ 772	[1]	$ 684	$ 2,383	[1]	$ 2,054	$ 1,727

[1] As discussed in Note 1, the Company began consolidating Mexico on August 30, 2010.

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Stockholders' Equity (Tables)

12 Months Ended

Aug. 28, 2011

Stockholders' Equity

Stock Repurchased During The Period

	Shares Repurchased (000's)		Average Price per Share		Total Cost
2011		8,939	$	71.74	$	641
2010		9,943		57.14		568
2009		895		63.84		57

Stock Repurchase Authorizations

Date Authorized	Amount Authorized		Amount Repurchased		Amount Remaining
Prior to November 2007	$	4,800	$	4,800	$	0
November 2007 (expired in November 2010)(1)		1,000		705		0
July 2008 (expired in July 2011)(2)		1,000		208		0
April 2011 (expires April 2015)		4,000		294		3,706
Total	$	10,800	$	6,007	$	3,706

(1) In November 2010, $295 of the November 2007 authorization expired having been unused by the Company.

(2) In April 2011, $792 of the July 2008 authorization was cancelled and replaced by the Board of Directors upon authorization of the April 2011 stock repurchase program.

Schedule Of Accumulated Other Comprehensive Income

	2011		2010
Unrealized gains on short-term investments	$	7	$	6
Foreign-currency translation adjustment and other		366		116
Accumulated other comprehensive income	$	373	$	122

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Consolidated Statements Of Equity And Comprehensive Income (USD $) In Millions, except Share data	Common Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Other Comprehensive Income [Member]	Retained Earnings [Member]	Total Costco Stockholders' Equity [Member]	Noncontrolling Interests [Member]	Total
BALANCE, value at Aug. 31, 2008	$ 2	$ 3,543	$ 288	$ 5,361	$ 9,194	$ 80	$ 9,274
BALANCE, shares at Aug. 31, 2008	432,513,000
Comprehensive Income:
Net income				1,086	1,086	13	1,099
Unrealized gain on short-term investments, net of tax			3		3	0	3
Foreign-currency translation adjustment and other			(181)		(181)	(4)	(185)
Comprehensive income					908	9	917
Stock options exercised and release of vested restricted stock units, including tax effects, value	0	75			75		75
Stock options exercised and release of vested restricted stock units, including tax effects, shares	3,794,000
Conversion of convertible notes, value	0	19			19		19
Conversion of convertible notes, shares	562,000
Repurchases of common stock, value	0	(7)		(50)	(57)		(57)
Repurchases of common stock, shares	(895,000)						(895,000)
Stock-based compensation		181			181		181
Cash dividends				(296)	(296)		(296)
Distribution to noncontrolling interest						(9)	(9)
BALANCE, value at Aug. 30, 2009	2	3,811	110	6,101	10,024	80	10,104
BALANCE, shares at Aug. 30, 2009	435,974,000
Initial consolidation of noncontrolling interest in Costco Mexico							357
Comprehensive Income:
Net income				1,303	1,303	20	1,323
Unrealized gain on short-term investments, net of tax			3		3	0	3
Foreign-currency translation adjustment and other			9		9	1	10
Comprehensive income					1,315	21	1,336
Stock options exercised and release of vested restricted stock units, including tax effects, value	0	205			205		205
Stock options exercised and release of vested restricted stock units, including tax effects, shares	7,461,000
Conversion of convertible notes, value	0	1			1		1
Conversion of convertible notes, shares	18,000
Repurchases of common stock, value	0	(92)		(476)	(568)		(568)
Repurchases of common stock, shares	(9,943,000)						(9,943,000)
Stock-based compensation		190			190		190
Cash dividends				(338)	(338)		(338)
BALANCE, value at Aug. 29, 2010	2	4,115	122	6,590	10,829	101	10,930
BALANCE, shares at Aug. 29, 2010	433,510,000						433,510,000
Initial consolidation of noncontrolling interest in Costco Mexico					0	357	357
Comprehensive Income:
Net income				1,462	1,462	80	1,542	[1]
Unrealized gain on short-term investments, net of tax			1		1	0	1
Foreign-currency translation adjustment and other			250		250	24	274
Comprehensive income					1,713	104	1,817
Stock options exercised and release of vested restricted stock units, including tax effects, value	0	281			281		281
Stock options exercised and release of vested restricted stock units, including tax effects, shares	9,630,000
Conversion of convertible notes, value	0	2			2		2
Conversion of convertible notes, shares	65,000
Repurchases of common stock, value	0	(89)		(552)	(641)		(641)
Repurchases of common stock, shares	(8,939,000)						(8,939,000)
Stock-based compensation		207			207		207
Cash dividends				(389)	(389)		(389)
Investment by noncontrolling interest						9	9
BALANCE, value at Aug. 28, 2011	$ 2	$ 4,516	$ 373	$ 7,111	$ 12,002	$ 571	$ 12,573
BALANCE, shares at Aug. 28, 2011	434,266,000						434,266,000

[1] As discussed in Note 1, the Company began consolidating Mexico on August 30, 2010.

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Subsequent Event

12 Months Ended

Aug. 28, 2011

Subsequent Event

Subsequent Event

Note 14—Subsequent Event

On October 5, 2011, the Company's Japanese subsidiary entered into an agreement to issue promissory notes through a private placement, bearing interest at 1.18%. These yen denominated notes are being issued in two series, with separate funding dates: $79 on October 5, 2011 and $52 on December 20, 2011. For both series of notes, interest is payable semi-annually, and principal is due on October 5, 2018. The Company guarantees all financing instruments issued by its Japanese subsidiary.

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Investments (Available-For-Sale And Held-To-Maturity Investments) (Details) (USD $) In Millions	Aug. 28, 2011	Aug. 29, 2010
Available-for-sale debt maturities, Cost Basis	$ 1,322
Held-to-maturity, Cost Basis	272
Total investments, Cost Basis	1,594	1,527
Unrealized Gains	10	8
Unrealized Losses	0	0
Total available-for-sale, Recorded Basis	1,332
Held-to-maturity, Recorded Basis	272
Total investments, Recorded Basis	1,604	1,535
Available-for-Sale Securities [Member]
Available-for-sale debt maturities, Cost Basis	1,322	1,394
Unrealized Gains	10	8
Unrealized Losses	0	0
Total available-for-sale, Recorded Basis	1,332	1,402
Available-for-Sale Securities [Member] | U.S. Government and Agency Securities [Member]
Available-for-sale debt maturities, Cost Basis	1,096	1,222
Unrealized Gains	8	7
Unrealized Losses	0	0
Total available-for-sale, Recorded Basis	1,104	1,229
Available-for-Sale Securities [Member] | Corporate Notes and Bonds [Member]
Available-for-sale debt maturities, Cost Basis	6	10
Unrealized Gains	1	1
Unrealized Losses	0	0
Total available-for-sale, Recorded Basis	7	11
Available-for-Sale Securities [Member] | FDIC Insured Corporate Bonds [Member]
Available-for-sale debt maturities, Cost Basis	208	139
Unrealized Gains	1	0
Unrealized Losses	0	0
Total available-for-sale, Recorded Basis	209	139
Available-for-Sale Securities [Member] | Asset and Mortgage-Backed Securities [Member]
Available-for-sale debt maturities, Cost Basis	12	23
Unrealized Gains	0	0
Unrealized Losses	0	0
Total available-for-sale, Recorded Basis	12	23
Held-to-Maturity Securities [Member] | Certificates of Deposit [Member]
Held-to-maturity, Cost Basis	272	133
Held-to-maturity, Recorded Basis	$ 272	$ 133

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Summary Of Significant Accounting Policies (Tables)

12 Months Ended

Aug. 28, 2011

Summary Of Significant Accounting Policies

Receivables, Net

	2011			2010
Vendor receivables, and other	$	487		$	448
Reinsurance receivables		201			196
Receivables from governmental entities		98			64
Other receivables		96			103
Third-party pharmacy receivables		86			75
Allowance for doubtful accounts		(3	)		(2	)
Receivables, Net	$	965		$	884

Merchandise Inventories

	2011		2010
United States (primarily LIFO)	$	4,548	$	4,150
Foreign (FIFO)		2,090		1,488
Merchandise Inventories	$	6,638	$	5,638

Useful Life By Asset Category

	Years
Buildings and improvements	5 - 50
Equipment and fixtures	3- 20

Other Assets

	2011		2010
Prepaid rents, lease costs, and long-term deposits	$	211	$	186
Tax-related assets		179		18
Goodwill, net		74		71
Cash surrender value of life insurance		64		65
Other		95		96
Investment in Mexico		0		357
Other Assets	$	623	$	793

Other Current Liabilities

	2011		2010
Accrued member rewards	$	602	$	522
Insurance-related liabilities		276		263
Tax-related liabilities		122		79
Cash card liability		112		100
Deferred sales		141		98
Other current liabilities		96		86
Vendor consideration liabilities		66		57
Sales return reserve		74		72
Interest payable		51		51
Other Current Liabilities	$	1,540	$	1,328

Provision For Impaired Assets And Closing Costs, Net

	2011		2010		2009
Warehouse closing expenses	$	8	$	6	$	9
Impairment of long-lived assets		1		2		8
Provision for Impaired Assets and Closing Costs, Net	$	9	$	8	$	17

Interest Income And Other, Net

	2011		2010		2009
Interest income, net	$	41	$	23	$	27
Earnings of affiliates and other, net		19		65		31
Interest Income and Other, Net	$	60	$	88	$	58

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Income Taxes (Reconciliation Between Statutory And Effective Rates) (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Aug. 28, 2011	Aug. 29, 2010	Aug. 30, 2009
Income Taxes
Federal taxes at statutory rate, value	$ 834	$ 718	$ 604
Federal taxes at statutory rate, rate	35.00%	35.00%	35.00%
State taxes, net, value	55	56	48
State taxes, net, rate	2.40%	2.70%	2.80%
Foreign taxes, net, value	(66)	(38)	(24)
Foreign taxes, net, rate	(2.80%)	(1.90%)	(1.40%)
Other, value	18	(5)	0
Other, rate	0.70%	(0.20%)	0.00%
Total provision for income taxes	$ 841	$ 731	$ 628
Total, rate	35.30%	35.60%	36.40%

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Retirement Plans (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Aug. 28, 2011	Aug. 29, 2010	Aug. 30, 2009
Minimum number of days of employment to qualify for 401(k) Retirement Plan	90
Amounts expensed under defined contribution and defined benefit plans	$ 345	$ 313	$ 287
US Employees Other Than California Union [Member]
Deferred pre-tax matching contribution rate of employee benefits	50% of the first one thousand dollars
California Union Employees [Member]
Deferred pre-tax matching contribution rate of employee benefits	50% of the first five hundred dollars

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Consolidated Statements Of Cash Flows (USD $) In Millions	12 Months Ended
	Aug. 28, 2011		Aug. 29, 2010	Aug. 30, 2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net income including noncontrolling interests	$ 1,542	[1]	$ 1,323	$ 1,099
Adjustments to reconcile net income including noncontrolling interests to net cash provided by operating activities:
Depreciation and amortization	855		795	728
Stock-based compensation	207		190	181
Undistributed equity earnings in joint ventures	(1)		(42)	(33)
Excess tax benefits on stock-based awards	(45)		(10)	(2)
Other non-cash operating activities, net	24		2	46
Deferred income tax expense	84		7	70
Changes in operating assets and liabilities, net of the initial consolidation of Costco Mexico at the beginning of fiscal 2011:
Increase in merchandise inventories	(642)		(213)	(394)
Increase in accounts payable	804		445	255
Other operating assets and liabilities, net	370		283	142
Net cash provided by operating activities	3,198		2,780	2,092
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment	(1,290)		(1,055)	(1,250)
Increase resulting from initial consolidation of Costco Mexico	165		0	0
Proceeds from the sale of property and equipment	16		4	7
Purchases of short-term investments	(3,276)		(2,693)	(1,806)
Maturities of short-term investments	2,614		1,428	1,780
Sales of investments	602		309	183
Other investing activities, net	(11)		(8)	(15)
Net cash used in investing activities	(1,180)		(2,015)	(1,101)
CASH FLOWS FROM FINANCING ACTIVITIES
Change in bank checks outstanding	(514)		5	(22)
Repayments of short-term borrowings	(105)		(73)	(1,777)
Proceeds from short-term borrowings	79		81	1,669
Repayments of long-term debt	0		(84)	(6)
Cash dividend payments	(389)		(338)	(296)
Investment by (distribution to) noncontrolling interests	9		0	(9)
Excess tax benefits on stock-based awards	45		10	2
Proceeds from stock-based awards, net of minimum tax withholdings	224		193	69
Repurchases of common stock	(624)		(551)	(69)
Other financing activities, net	(2)		38	0
Net cash used in financing activities	(1,277)		(719)	(439)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	54		11	(14)
Net increase in cash and cash equivalents	795		57	538
CASH AND CASH EQUIVALENTS BEGINNING OF YEAR	3,214		3,157	2,619
CASH AND CASH EQUIVALENTS END OF YEAR	4,009		3,214	3,157
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest (reduced by $9, $11, and $8 interest capitalized in 2011, 2010, and 2009, respectively)	111		110	104
Income taxes	742		637	565
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
(Decrease) Increase in accrued property and equipment	(10)		24	20
Common stock issued upon conversion of 3.5% Zero Coupon Convertible Subordinated Notes	2		1	19
Property acquired under capital leases	0		90	72
Unsettled repurchases of common stock	$ 17		$ 17	$ 0

[1] As discussed in Note 1, the Company began consolidating Mexico on August 30, 2010.

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Retirement Plans

12 Months Ended

Aug. 28, 2011

Retirement Plans

Retirement Plans

Note 8—Retirement Plans

The Company has a 401(k) Retirement Plan that is available to all U.S. employees who have completed 90 days of employment. For all U.S. employees, with the exception of California union employees, the plan allows pre-tax deferrals against which the Company matches 50% of the first one thousand dollars of employee contributions. In addition, the Company provides each eligible participant an annual discretionary contribution based on salary and years of service.

California union employees participate in a defined benefit plan sponsored by their union. The Company makes contributions based upon its union agreement. For all the California union employees, the Company-sponsored 401(k) plan currently allows pre-tax deferrals against which the Company matches 50% of the first five hundred dollars of employee contributions. In addition, the Company will provide each eligible participant a contribution based on hours worked and years of service.

The Company has a defined contribution plan for Canadian and United Kingdom employees and contributes a percentage of each employee's salary. Certain other foreign operations have defined benefit and defined contribution plans that are not material. Amounts expensed under all plans were $345, $313, and $287 for 2011, 2010, and 2009, respectively, and were included in selling, general and administrative expenses and merchandise costs on the consolidated statements of income.

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Leases (Aggregate Rental Expense And Sublease Income) (Details) (USD $) In Millions	12 Months Ended
	Aug. 28, 2011		Aug. 29, 2010		Aug. 30, 2009
Leases
Aggregate rental expense	$ 208		$ 187		$ 177
Sublease income	$ 10	[1]	$ 10	[1]	$ 10	[1]

[1] Included in interest income and other, net

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Stockholders' Equity (Stock Repurchase Authorizations) (Details) (USD $) In Millions	12 Months Ended		1 Months Ended	12 Months Ended		1 Months Ended	12 Months Ended
	Aug. 28, 2011	Aug. 28, 2011 Prior to November 2007 [Member]	Nov. 30, 2010 November 2007 [Member]	Aug. 28, 2011 November 2007 [Member]		Apr. 30, 2011 July 2008 [Member]	Aug. 28, 2011 July 2008 [Member]		Aug. 28, 2011 April 2011 [Member]
Amount Authorized	$ 10,800	$ 4,800		$ 1,000	[1]		$ 1,000	[2]	$ 4,000
Amount Repurchased	6,007	4,800		705	[1]		208	[2]	294
Amount Remaining	3,706	0		0	[1]		0	[2]	3,706
Stock repurchased amount expiration date				November 2010)			July 2011		April 2015
Previously authorized but unused share repurchase amount, revoked or expired			$ 295			$ 792

[1] In November 2010, $295 of the November 2007 authorization expired having been unused by the Company.

[2] In April 2011, $792 of the July 2008 authorization was cancelled and replaced by the Board of Directors upon authorization of the April 2011 stock repurchase program.

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Income Taxes (Narrative) (Details) (USD $) In Millions	12 Months Ended
	Aug. 28, 2011	Aug. 29, 2010	Aug. 30, 2009
Income Taxes
Income tax benefits allocated directly to equity	$ 59	$ 15	$ 2
Current deferred income tax assets	360	307
Non-current deferred income tax assets	53	10
Non-current deferred income tax liabilities	387	244
Undistributed earnings of certain non-U.S. affiliates	2,646	1,972
Tax positions with highly certain deductibility and uncertain timing of such deductibility	64
Tax benefits that would favorably affect the effective income tax	34	27
Expense related to interest and penalties	2	7
Accrued interest and penalties	$ 12	$ 9

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Quarterly Financial Data (Tables)

12 Months Ended

Aug. 28, 2011

Aug. 29, 2010

Quarterly Financial Data

Quarterly Results Of Operations

	52 Weeks Ended August 28, 2011(1)
	First Quarter 12 Weeks			Second Quarter 12 Weeks			Third Quarter 12 Weeks			Fourth Quarter 16 Weeks			Total 52 Weeks
REVENUE
Net sales	$	18,823		$	20,449		$	20,188		$	27,588		$	87,048
Membership fees		416			426			435			590			1,867
Total revenue		19,239			20,875			20,623			28,178			88,915
OPERATING EXPENSES
Merchandise costs		16,757			18,235	(2)		18,067	(2)		24,680	(2)		77,739
Selling, general and administrative		1,941			2,038			1,991			2,712			8,682
Preopening expenses		12			4			8			22			46
Provision for impaired assets and closing costs, net		4			2			1			2			9
Operating income		525			596			556			762			2,439
OTHER INCOME (EXPENSE)
Interest expense		(26	)		(27	)		(27	)		(36	)		(116	)
Interest income and other, net		5			4			5			46			60
INCOME BEFORE INCOME TAXES		504			573			534			772			2,383
Provision for income taxes		172			204			193			272			841
Net income including noncontrolling interests		332			369			341			500			1,542
Net income attributable to noncontrolling interests		(20	)		(21	)		(17	)		(22	)		(80	)
NET INCOME ATTRIBUTABLE TO COSTCO	$	312		$	348		$	324		$	478		$	1,462
NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO:
Basic	$	0.72		$	0.80		$	0.74		$	1.09		$	3.35
Diluted	$	0.71		$	0.79		$	0.73		$	1.08		$	3.30
Shares used in calculation (000's)
Basic		434,099			436,682			436,977			436,596			436,119
Diluted		441,360			443,186			443,570			443,518			443,094
Dividends per share	$	0.205		$	0.205		$	0.240		$	0.240		$	0.89

(1) As discussed in Note 1, the Company began consolidating Mexico on August 30, 2010.

(2) Includes a $6, $49, and $32 increase to merchandise costs for a LIFO inventory adjustment for the second, third and fourth quarters, respectively. (See note 1—Merchandise Inventories).

	52 Weeks Ended August 29, 2010
	First Quarter 12 Weeks			Second Quarter 12 Weeks			Third Quarter 12 Weeks			Fourth Quarter 16 Weeks			Total 52 Weeks
REVENUE
Net sales	$	16,922		$	18,356		$	17,385		$	23,592		$	76,255
Membership fees		377			386			395			533			1,691
Total revenue		17,299			18,742			17,780			24,125			77,946
OPERATING EXPENSES
Merchandise costs		15,081			16,396			15,494			21,024			67,995
Selling, general and administrative		1,777			1,873	(3)		1,789			2,401			7,840
Preopening expenses		11			3			3			9			26
Provision for impaired assets and closing costs, net		2			0			3			3			8
Operating income		428			470			491			688			2,077
OTHER INCOME (EXPENSE)
Interest expense		(24	)		(26	)		(27	)		(34	)		(111	)
Interest income and other, net		18			30			10			30			88
INCOME BEFORE INCOME TAXES		422			474			474			684			2,054
Provision for income taxes		152			169			163			247			731
Net income including noncontrolling interests		270			305			311			437			1,323
Net income attributable to noncontrolling interests		(4	)		(6	)		(5	)		(5	)		(20	)
NET INCOME ATTRIBUTABLE TO COSTCO	$	266		$	299		$	306		$	432		$	1,303
NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO:
Basic	$	0.61		$	0.68		$	0.69		$	0.99		$	2.97
Diluted	$	0.60		$	0.67		$	0.68		$	0.97		$	2.92
Shares used in calculation (000's)
Basic		437,173			439,786			440,973			437,071			438,611
Diluted		444,849			446,918			448,391			444,289			445,970
Dividends per share	$	0.180		$	0.180		$	0.205		$	0.205		$	0.77

(3) Includes a $22 charge related to a change in employee benefits whereby certain unused time off will now be paid annually to our employees.

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Segment Reporting

12 Months Ended

Aug. 28, 2011

Segment Reporting

Segment Reporting

Note 12—Segment Reporting

The Company and its subsidiaries are principally engaged in the operation of membership warehouses in the United States, Canada, the United Kingdom, Japan, Australia, through majority-owned subsidiaries in Taiwan and Korea, and the Mexico joint venture. The Company's reportable segments are largely based on management's organization of the operating segments for operational decisions and assessments of financial performance, which considers geographic locations. As discussed in Note 1, the Company began consolidating Mexico on August 30, 2010. For segment reporting, these operations are included as a component of other international operations for the year ended August 28, 2011. Prior year amounts for Mexico are only included in total assets under United States operations in the table below, representing the equity method investment in the joint venture, as it was previously accounted for under the equity method and its operations were not consolidated. The material accounting policies of the segments are the same as those described in Note 1. All material inter-segment net sales and expenses have been eliminated in computing total revenue and operating income.

	United States Operations		Canadian Operations		Other International Operations		Total
Year Ended August 28, 2011
Total revenue	$	64,904	$	14,020	$	9,991	$	88,915
Operating income		1,395		621		423		2,439
Depreciation and amortization		640		117		98		855
Capital expenditures, net		876		144		270		1,290
Property and equipment, net		8,870		1,608		1,954		12,432
Total assets		18,558		3,741		4,462		26,761
Year Ended August 29, 2010
Total revenue	$	59,624	$	12,051	$	6,271	$	77,946
Operating income		1,310		547		220		2,077
Depreciation and amortization		625		107		63		795
Capital expenditures, net		804		162		89		1,055
Property and equipment, net		8,709		1,474		1,131		11,314
Total assets		18,247		3,147		2,421		23,815
Year Ended August 30, 2009
Total revenue	$	56,548	$	9,737	$	5,137	$	71,422
Operating income		1,273		354		150		1,777
Depreciation and amortization		589		90		49		728
Capital expenditures, net		904		135		211		1,250
Property and equipment, net		8,415		1,394		1,091		10,900
Total assets		17,228		2,641		2,110		21,979

Certain home office operating expenses are incurred on behalf of the Company's Canadian and Other International Operations, but are included in the United States Operations above because those costs are not allocated internally and generally come under the responsibility of the Company's United States management team.

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Consolidated Balance Sheets (USD $) In Millions	Aug. 28, 2011	Aug. 29, 2010
CURRENT ASSETS
Cash and cash equivalents	$ 4,009	$ 3,214
Short-term investments	1,604	1,535
Receivables, net	965	884
Merchandise inventories	6,638	5,638
Deferred income taxes and other current assets	490	437
Total current assets	13,706	11,708
PROPERTY AND EQUIPMENT
Land	3,819	3,484
Buildings and improvements	10,278	9,096
Equipment and fixtures	4,002	3,513
Construction in progress	269	267
Gross property, plant and equipment	18,368	16,360
Less accumulated depreciation and amortization	(5,936)	(5,046)
Net property and equipment	12,432	11,314
OTHER ASSETS	623	793
TOTAL ASSETS	26,761	23,815
CURRENT LIABILITIES
Short-term borrowings	0	26
Accounts payable	6,544	5,947
Current portion of long-term debt	900	0
Accrued salaries and benefits	1,758	1,571
Accrued sales and other taxes	335	322
Other current liabilities	1,540	1,328
Deferred membership fees	973	869
Total current liabilities	12,050	10,063
LONG-TERM DEBT, excluding current portion	1,253	2,141
DEFERRED INCOME TAXES AND OTHER LIABILITIES	885	681
Total liabilities	14,188	12,885
COMMITMENTS AND CONTINGENCIES
EQUITY
Preferred stock $.005 par value; 100,000,000 shares authorized; no shares issued and outstanding	0	0
Common stock $.005 par value; 900,000,000 shares authorized 434,266,000 and 433,510,000 shares issued and outstanding	2	2
Additional paid-in capital	4,516	4,115
Accumulated other comprehensive income	373	122
Retained earnings	7,111	6,590
Total Costco stockholders' equity	12,002	10,829
Noncontrolling interests	571	101
Total equity	12,573	10,930
TOTAL LIABILITIES AND EQUITY	$ 26,761	$ 23,815

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Summary Of Significant Accounting Policies (Receivables, Net) (Details) (USD $) In Millions	Aug. 28, 2011	Aug. 29, 2010
Summary Of Significant Accounting Policies
Vendor receivables, and other	$ 487	$ 448
Reinsurance receivables	201	196
Receivables from government entities	98	64
Other receivables	96	103
Third-party pharmacy receivables	86	75
Allowance for doubtful accounts	(3)	(2)
Receivables, Net	$ 965	$ 884

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Subsequent Event (Details) (USD $) In Millions, unless otherwise specified	Oct. 05, 2011 Series One [Member]	Aug. 28, 2011 Series One [Member]	Dec. 20, 2011 Series Two [Member]	Oct. 05, 2011 Series Two [Member]	Oct. 05, 2011 Private Placement [Member]
Funding amount	$ 79		$ 52
Loan interest rate, fixed					1.18%
Debt instrument date principal due		October 5, 2018		October 5, 2018

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Net Income Per Common And Common Equivalent Share (Details) (USD $) In Millions, except Share data in Thousands	3 Months Ended												12 Months Ended
	May 08, 2011		Feb. 13, 2011		Nov. 21, 2010		May 09, 2010	Feb. 14, 2010	Nov. 22, 2009	Aug. 28, 2011		Aug. 29, 2010	Aug. 28, 2011		Aug. 29, 2010	Aug. 30, 2009
Net Income Per Common And Common Equivalent Share
Net income available to common stockholders used in basic net income per common share	$ 324	[1]	$ 348	[1]	$ 312	[1]	$ 306	$ 299	$ 266	$ 478	[1]	$ 432	$ 1,462	[1]	$ 1,303	$ 1,086
Interest on convertible notes, net of tax													1		1	1
Net income available to common stockholders after assumed conversions of dilutive securities													$ 1,463		$ 1,304	$ 1,087
Weighted average number of common shares used in basic net income per common share	436,977	[1]	436,682	[1]	434,099	[1]	440,973	439,786	437,173	436,596	[1]	437,071	436,119	[1]	438,611	433,988
Stock options and RSUs													6,063		6,409	5,072
Conversion of convertible notes													912		950	1,394
Weighted number of common shares and dilutive potential of common stock used in diluted net income per share	443,570	[1]	443,186	[1]	441,360	[1]	448,391	446,918	444,849	443,518	[1]	444,289	443,094	[1]	445,970	440,454
Anti-dilutive stock options and RSUs													0		1,141	8,045

[1] As discussed in Note 1, the Company began consolidating Mexico on August 30, 2010.

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Debt (Schedule Of Short-Term Debt) (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Aug. 28, 2011	Aug. 29, 2010
Canada [Member]
Maximum Amount Outstanding During the Fiscal Year	$ 6	$ 1
Average Amount Outstanding During the Fiscal Year	4	1
Weighted Average Interest Rate During the Fiscal Year	3.00%	2.75%
Japan [Member]
Maximum Amount Outstanding During the Fiscal Year	70	64
Average Amount Outstanding During the Fiscal Year	20	39
Weighted Average Interest Rate During the Fiscal Year	0.58%	0.63%
United Kingdom [Member]
Maximum Amount Outstanding During the Fiscal Year	16	5
Average Amount Outstanding During the Fiscal Year	$ 4	$ 2
Weighted Average Interest Rate During the Fiscal Year	1.50%	1.50%

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Stockholders' Equity (Narrative) (Details) (USD $)	3 Months Ended
	Aug. 28, 2011
Stockholders' Equity
Dividends declared and paid	$ 0.24

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Stock-Based Compensation Plans (Summary Of Stock-Based Compensation) (Details) (USD $) In Millions	12 Months Ended
	Aug. 28, 2011	Aug. 29, 2010	Aug. 30, 2009
Total stock-based compensation expense before income taxes	$ 207	$ 190	$ 181
Less recognized income tax benefit	67	63	60
Total stock-based compensation expense, net of income taxes	140	127	121
Restricted Stock Units [Member]
Total stock-based compensation expense before income taxes	206	171	132
Stock Option [Member]
Total stock-based compensation expense before income taxes	$ 1	$ 19	$ 49

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Investments (Proceeds And Gross Realized Gains (Losses) From The Sales Of Available-For-Sale Securities) (Details) (USD $) In Millions	12 Months Ended
	Aug. 28, 2011	Aug. 29, 2010	Aug. 30, 2009
Investments
Proceeds	$ 602	$ 309	$ 183
Realized gains	1	5	5
Realized losses	$ 0	$ 1	$ 2

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Investments (Maturities Of Securities Excluding Trading Securities) (Details) (USD $) In Millions	Aug. 28, 2011
Investments
Available-for-sale securities, cost basis due in one year or less	$ 890
Available-for-sale securities, cost basis due in one year through five years	426
Available-for-sale securities, cost basis due after five years	6
Available-for-sale securities, cost basis, total	1,322
Available-for-sale securities, fair value due in one year or less	892
Available-for-sale securities, fair value due in one year through five years	433
Available-for-sale securities, fair value after five years	7
Available-for-sale securities, fair value, total	1,332
Held-to-maturity, cost basis due in one year or less	272
Held-to-maturity, cost basis due after one year through five years	0
Held-to-maturity, cost basis due after five years	0
Held-to-maturity, cost basis, total	272
Held-to-maturity, fair value in one year or less	272
Held-to-maturity, fair value after one year through five years	0
Held-to-maturity, fair value after five years	0
Held-to-maturity securities, fair value, total	$ 272

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Leases (Narrative) (Details) (USD $) In Millions	Aug. 28, 2011	Aug. 29, 2010
Leases
Gross assets recorded under leases	$ 170	$ 169
Accumulated amortization related to leased assets	13	7
Sublease income	183
Asset retirement obligations associated with these leases	$ 31	$ 26

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Summary Of Significant Accounting Policies (Merchandise Inventories) (Details) (USD $) In Millions	Aug. 28, 2011	Aug. 29, 2010
Merchandise inventories	$ 6,638	$ 5,638
United States [Member]
United States (primarily LIFO)	4,548	4,150
Foreign [Member]
Foreign (FIFO)	$ 2,090	$ 1,488